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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. 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 large Clothing Retailers operating in the United Kingdom and outsourcing their garment from the developing countries. 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 of the business of 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, cloth retailers and brand manufacturers were forced to source their produce and manufactured goods from low-wage cheap raw materials from 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. In the 1970s, considerable criticism was raised among other things, this report examines the historical aspect of cloth retailers and the challenges involved in upholding human rights in their supply chain production. The raised against global companies concerning activities in the developing countries, the worldwide unions as well host countries complained that carrying out their business activities without looking at the importance of social and economic development of the sourcing countries in which doing their operation. That criticism has led to the establishment to the numbers of organisation and government institution for established code such as that of the United Nations.
Among other things, this report examines the historical aspect of cloth retailers and the challenges involved in upholding human rights in their supply chain production. The report further examines the role played by these cloth retailers in upholding human rights in their operations all over the world. (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm)
CHAPTER ONE: BACKGROUND INFORMATION
Human rights are free and fundamental liberties entitled to an individual without the interference from any government or group. A person's civil liberties are protected by the constitutions that define them and the organizations that exist to promote them. The implementation of human rights does not go unexcused in any place of situation regardless of the circumstances. 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 global economy is changing in many ways, affecting multinational investment, capital markets, technology and business; more specifically impacting companies, consumers, workers and governments. 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). Unfortunately, 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).
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 of their business activities , 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:
(a) To explore the historical background with regard to textile sector and their compliance to human rights.
(b) To examine the rise of ethical business and the effects of Voluntary Labour Standards (Codes of Conduct) in the textile industry.
(c) To examine the role played by these multinational large clothing retailers in upholding human rights as well as challenges facing them.
2.0 CHAPTER TWO: 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.
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.
United National Universal Declaration for Human Rights (UDHR) define 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 the study of morality and the application of reason to explain special rules and principles that determine right and wrong for a given situation, those rules and principles are called ethical theories.
However Fritz et al, (1999), and Hunt et al (1989) define ethical company as the principles positively related to employee's organizational commitment.
Boddy (2005) define ethics as code of moral principles and values that guide the actions of people and groups through set standard as what is acceptable behaviour, 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 between different parties within the organization, such as employees, customers, suppliers and the shareholders in the determination of the what is right or wrong.
2.1.2 Sourcing in the Textile Industry
Stiff competition, shaped by globalization, cloth 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 on the protection and promotion of human rights in multinational companies.
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, 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 pg 9) 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 which operations around the world to 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 (http://www.thesullivanfoundation.org/gsp/principles/gsp/default.asp).
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 and cloth 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), for example Nike they could care about working condition and wages to the subcontractors however media started to attack Nike, they realised the reputation and image of the company should be destroy Nike start to take action .(Meyer R et al 2004) 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 has to be understood in the context of the continuing 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 international standards such as the United Nations Global Compact, 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 to the extent to which corporate codes mention international ILO (International Labour Organization) and UN (United Nations) conventions on child labour, which can be done either explicitly or implicitly, through the inclusion of the major provisions of international organizations' standards in the corporate codes. (Van Tulder &
Some government campaigns also had significant influence on industrialists and encouraged them to give greater attention to social matters. In Europe some governments, such as that of France, were calling for greater respect of human rights in the sphere of international business. They were actively participating in national studies as well as research carried out by the European Commission on the social aspect of international subcontracting in the Textile Clothing and Footwear sectors (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm )
In 1996, President Clinton Launched the White House Apparel Industry on Workplace Standard (AIP), the aim of the AIP was to set standards and to ensure apparel and footwear were not made under sweatshop for the conditions (Meyer and De Wit (2004). However, in USA the so-called "No Sweat" campaign introduced by the Clinton Administration in the fight against sweatshops led to the establishment of a Trendsetter List of enterprises in the Textile Clothing and Footwear sectors which respected labour legislation and human rights in general in their production and marketing activities and ensure that these rights were respected by their subcontractors. The Department of Labour, which had identified a number of deficiencies concerning the respect of human rights and labour legislation in the Textile Clothing and Footwear sectors, in particular in subcontracting of apparel production, and which had been faced with a number of cases involving the exploitation of immigrant workers in sweatshops set up on the United States territory, took steps to clean up the sector (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm). Specifically in the area of child labour, for example, the United States Government took a number of steps to alleviate the problem. Between 1994 and 1996, the Bureau of International Labour Affairs of the Department of Labour organized three public hearings on international child labour issues which outlined the conditions of child exploitation in the world in all industries which exported products to the United States.
Furthermore, in May 1995, the Clothing Manufacturers' Association of the United States of America (employers) and the Amalgamated Clothing Textiles Workers' Union (workers) signed for the first time a national branch collective agreement which included, amongst other aspects, a code of conduct applicable to companies and their subcontractors which established minimum standards regarding wages, hours of work, forced labour, child labour, freedom of association, non-discrimination as well as occupational safety and health. Consumers' associations as well as a number of non-governmental organizations have also endeavoured to draw the attention of consumers, the public authorities and the enterprises concerned to the need to respect a number of minimum rules regarding human rights (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm). In1998 established of the Fair Labour Associations (FLA) to overseas compliance with is Workplace Code of Conduct. The goals of FLA was the companies required to monitor their own factories and their subcontractors to make sure there is compliance of the Code of Conduct 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 decisive factor for the adoption of such codes was the public image which the company wanted to project to its customers, employees, suppliers and shareholders. An enterprise's public image was now an asset which had to be protected and developed to the maximum. In the textile and footwear sectors, a company's public image was particularly important and often determined a decision whether the public would buy its goods. On these highly competitive markets, it was therefore important for a company to project a positive image and to retain a good reputation over the long term (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm).
The United Nation Universal Declaration of Human Rights was adopted by the General Assembly in 1948 (Schulz, 2001). The declaration proclaims that no one shall be held in slavery or servitude, subjected to inhuman or degrading treatment or punishment, or subjected to arbitrary arrest, detention, or exile. The declaration goes on to proclaim that everyone has the right to life, liberty, and security of person; is entitled to equal protection against any discrimination, and has the right to work, to free choice of employment, to just and favourable conditions of work, and to protection against unemployment as a result of discrimination.
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, freedom of association, the right of collective bargaining, 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 and Human Rights watch report on human rights issues all around the world and strive 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, adopted by the General Assembly Resolution in 1948. Its protection and standard of human rights were established in thirty articles that later set the primary foundation to policies and standard carried out by NGOs and other agencies with the purpose to protect and promote fundamental rights
The Social Accountability International (SAI), established in 1977, is an organization that promotes human rights for workers around the world. Its SA8000 standards are obtained from the Universal Declaration of Human Rights and the International Labour organization (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 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 assure 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 on Fundamental Principles and Rights at work were adopted in 1998 and are “an expression of commitment by governments, employers, and workers organizations to uphold basic human rights.
(http://www.ilo.org/public/english/standard/norm/introduction/index.htm).The Declaration covers four areas;
1. Freedom of association and the right to collective bargaining
2. Elimination of forced and compulsory labor
3. Abolition of child labor
4. Elimination of discrimination
The voluntary Principles on Security and Human Rights were developed by governments of the U.S., UK, Norway, Netherlands and NGOs, “who all have the interesting human rights and corporate social responsibility” ((voluntaryprinciple.org/participant)).
There are 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:
1. Acknowledge that security is a fundamental need;
2. Understanding that governments have the primary responsibility to promote and protect human rights, particularly those set forth in the Universal Declaration of Human rights.
3. Emphasizing the importance of safeguarding the integrity of company personnel and property.
4. Taking note of the effect that companies' activities and decisions affect the local community.
5. 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/AboutGRI). 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 (globalreporting.org/Framework).
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 (http://www.unglobalcompact.org). The UN's Global Compact was launched in the year 2000 in New York City. Many companies from all regions of the world are engaged in the activities of this organization. Its main agenda is to ask and persuade its members (or participants) to support and enact within their areas of operations a set of core values that enhance the promotion of human rights (http://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 their search for a balance between the lowest possible production costs, to protect their competitiveness, and the maintenance of a good social image likely to satisfy consumers and pressure groups, 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 for having poor working conditions in its supplier's factories in El-Salvador. Gap inc. is one of the world's largest specialty retailers with more than 3,100 stores. Accusations of beatings, verbal abuse, 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 was ended “only when the company agreed to the demands of anti-sweatshop activists” (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm).
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).
The codes of conduct or codes of practice adopted by a number of mainly multinational enterprises include a variable number of principles which define the ethical standards of the enterprise. These may be general principles such as, for example, the concept of non-discrimination while, in a number of cases, there is a detailed description of the social practices which the enterprise wishes to see respected in the production and sale of the goods and services which it markets. A number of codes make explicit reference to International labour Organization (ILO) Conventions, in particular those concerning the respect of human rights at work. In some cases, the reference is more indirect, even if the principles established are often based on fundamental ILO Conventions (Krage, 2007). It is further argued that codes drawn up by intergovernmental international organizations, and in particular that of the ILO in this sphere of social policy, which were of a voluntary kind can be seen as the forerunners of subsequent initiatives taken unilaterally by individual enterprises. United States enterprises have played a pioneering role in this respect.
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 started much earlier and was more widespread in the US. Japanese multinationals were lagging behind and reluctant to adopt codes. Thus compared to the US, in Europe and Japan, the trend was slow in coming, although increasing attention was given at the headquarters of the major European enterprises in the Textile sectors to the need to apply codes of conduct. In the developing countries, few initiatives of this kind have been taken. But a growing number of production enterprises working under subcontracting arrangements for the multinational enterprises of the industrialized countries must respect the codes established by the latter, which significantly affects their activities (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm) According to 1996 study by the U.S. Department of Labour identified 36 apparel manufacturers and retailers with 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 activist 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).
It has been also argued that consumers' associations as well as a number of non-governmental organizations endeavoured to draw the attention of consumers, the public authorities and the enterprises concerned to the need to respect a number of minimum rules regarding human rights (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm).
The adoption by a global enterprise of a code of conduct is an attempt to provide a kind of guarantee for the final consumer that the products made or marketed by the company have not involved any kind of exploitation of workers concerned. It is therefore up to the enterprise to implement the principles established in the code, at the risk of using its credibility. Given the importance of subcontracting practices in the textile sectors, it is clear that an enterprise which adopts a code of conduct takes a number of risks because any failure to respect the code which is noted by trade unions or the media will have greater impact and a correspondingly negative effect. This explains the importance of application conditions and helps explain why some enterprises prefer to keep a low profile and refrain from giving too much publicity to their codes of conduct. In order to maintain a good public image, without foregoing the possibility of stepping up their trade relations with subcontractors producing in the developing countries, the major retail networks have become aware of the importance of adopting a responsible ethical behaviour (www.ilo/org/public/dialogue). 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.
In 1996, the Department of Labour also published, at the request of Congress, a study on the influence of codes of conduct adopted by United States apparel enterprises on child labour. The study, which examined a representative sample of some 48 enterprises selected from the major firms in the production and marketing of clothing in the United States, clearly confirmed that the adoption and application of codes of conduct which contained a reference to the prohibition of child labour (in 42 out of 48 enterprises) had reduced child labour in the subcontracting enterprises established in the developing countries. The drop was particularly significant in Central America. The report further highlighted that although it is likely that a number of other factors also contributed to this improvement (greater awareness of consumers of the problems of child labour; concern by exporters about possible legislative measures to boycott products made with child labour), there is no doubt that the most significant impact was due to the increasing number of codes of conduct established by the multicultural companies (http://www.ilo.org/public/english/dialogue/sector/papers/bzethics/bthics2.htm)
By strengthening the role played by the developing countries in international business, the globalization of the economy has also encouraged greater awareness of the commercial importance of the respect or non-respect of basic standards relating to human rights. It is no longer possible for the developing countries which want to increase or maintain their penetration of the markets of industrialized countries to ignore the existence of various kinds of pressure which exist in this sphere (www.ilo/org/public/dialogue) (Sullivan, 2003; Shaw, 1999). Consequently, a number of governments have endeavoured, often with assistance from the International Labour Organization (ILO), to reduce the obstacles to the ratification of these fundamental standards and their effective application. The most dramatic progress has been made in this sphere of child Labour, which benefits from broad media coverage and against which pressure is greatest in the context of the liberalization of trade. The ILO has played an important role as catalyst, in particular through its International Programme for the Elimination of Child Labour (IPEC). In the textile cloth and footwear sectors, for example, within the framework of this Programme and in collaboration with UNICEF that the Bangladesh Garment Manufacturers' and Exporters' Association signed, with the support of governments and local non-governmental organizations, an agreement to discontinue the employment of children of school age in apparel enterprises and to provide for their participation in special education programmes. Social progress of this kind was one of the steps towards the establishment of more elaborate codes of conduct which took an account of the new social requirements of international trade (w
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 part of the International Clean Clothes Campaign, supported by various Non Governmental Organizations and trade unions.
The main way in which the UK food and cloth retailers responded to the pressure from NGOs and trade unions was for them to become members of the UK Ethical Trading Initiative (ETI). The Ethical Trading Initiative (ETI) is a multistakeholder organisation established in 1997, as a civil initiative sponsored by the UK government Department for International Development. By 2003, this multistakeholder organisation had thirty four corporate members, seventeen Non Governmental Organizations and representatives from 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 guide the implementation of responsible business standards in the context of the supply chains of those members. The base code consists of the following nine provisions which take much of the core International labour organization (ILO) Conventions:-
1. Employment is freely chosen.
2. Freedom of association and the right to collective bargaining are respected.
3. Working conditions are safe and hygienic.
4. Child labour should not be used.
5. Living wages are paid.
6. Working hours are not excessive.
7. No discrimination is practised.
8. Regular employment is provided.
9. No harsh or inhumane treatment is allowed.
All cloth retailers are signed members of the Ethical Trading Initiative (ETI), attend and engage in various events and meetings. The challenge is that the top level management are 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 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 a leading international specialty large retailer offering clothing, accessories and personal care products for men, women, children and babies. Gap operates with more than 4,200 stores worldwide. Customers can shop at Gap stores in five countries outside of the United State, Canada, France, Japan, 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 throughout the United States and in Canada, the United Kingdom, the Netherlands and Japan, 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 was chosen from among thousands of companies' evaluated as one of 100 "World's Most Ethical Companies. Gap, Inc. was ranked 25th by CRO Magazine, another industry publication that is a successor to Business Ethics magazine, in its “100 Best Corporate Citizens” list in 2007 (Krage, 2007; Wokutch, 2001). 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 and is an active member of the Ethical Trading Initiative (ETI), Social Accountability international (SAI) as well as an active participant in Global Compact, and Global Reporting Initiative (GRI) (Gap Inc., n.d).
Nike Inc. had located it is manufacturing mainly in southwest in search for low wages through subcontractors, in 2000 Nike had subcontracted over 500 of manufacturing of different footwear and apparel factories around the world (Meyer et al 2004). Nike, another early adopter, has been singled out for NGO campaigns because of its market leadership, high profile image and extensive marketing. Since 1992, it has revised its code of conduct several times, which is also conspicuous for the exceptionally high minimum age to employment (18 years for footwear, and 16 years for apparel, accessories and equipment (Wokutch, 2001). Nike is also featured on the Business and Human Rights Resource Centre's list for the “Top 21 Best Human Rights Reports by Companies” for their 2005 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 of the UK's leading of clothing, foods, household items and financial services, serving 10 million customers a week in over 350 UK stores. 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 based, 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
126.96.36.199 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, Labour Behind the Label issued a report naming The Gap a top-rated company among UK retailers it evaluate a group working in conjunction with Labour behind the Label, reported that although not complete, the supply chain compliance is the most sophisticated they had seen, and that the company has taken significant steps to resolve the systematic abuses of worker's rights. Gap actively participates in the "Joint Initiative on Corporate Accountability and Workers Rights" and is independently assessed by the Social Accountability International (SAI). The Gap encourages its vendors to be SA8000 certified. The company also inspects factories for compliance with its internal standards These standards include requiring suppliers not to employ persons under the age of 14, that wage payment is clear, regular, and in accordance with work contracts and those factories do not permit physical or non-physical abuse(www.cleanupfashion.co.uk).
In few cases, for example, in Latin America companies that seriously engaged in voluntary labor 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.
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 Labor 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 funneling 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 labor 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 compare with the high price of shoes, were reported activities occurring inside Nike factories. Nike also faced criticism for its use of child labor 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) and 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 Labor 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 labor 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 labor 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 cases in which employment has declined as a result of voluntary labor 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.
Although perceptions on child Labour also depend on cultural traditions, levels of economic development, and social conditions, a wide consensus exists on the unacceptability of the worst forms of child Labour. This is shown by worldwide support for the 1989 United Nations Convention on the Rights of the Child, and the rapid ratification of the 1999 ILO Convention on the Worst Forms of Child Labour (Kolk & Tulder, 2002).
Besides differences in governmental support that complicate the prevention of child Labour, implementation of such standards also proves difficult. This is especially due to the fact that the majority of child Labour takes place in the informal sector, which is usually not adequately covered by national legislation. Most children work in agriculture, services and small-scale manufacturing. While attention focuses on child Labour in export industries, they employ only a very small percentage, probably less than 5 percent, of the child workforce (UNICEF, 1997). This point is to the limits of government intervention and of international sanctions. At the same time, it underlines the role that international companies could potentially play, directly in their own operations in developing countries, and more indirectly by the activities that they outsource to local suppliers. It is here that corporate codes of conduct become important instruments.
Fairclough (1996) noted there is little known about the child labour dilemma. Those who advertise sanctions and boycotts to deal with problem do little more than addressing the real problem because nothing replaces these children's work except destitution. Thus, a guarantee that a soccer ball is not made by child labour does not necessary mean better welfare for children who could have made the soccer ball if they are excluded from the opportunity to make even a limited wage. Similarly, consumer boycotts and associated tactics create their own moral dilemma in a society where free choice is viewed as the most paramount of human rights (Garrett, 1986). Furthermore, several researchers have shown that trade sanctions or import tariffs against countries that use child labour do not always reduce the use of child labour in those countries in fact, Edmonds (2002) showed that globalization (or an elimination of sanctions and/or tariffs) has reduced the use of child labour in Vietnam, especially for older female children. An equally important finding was that the percentage of children attending school significantly increased over the same period, which suggests that children who had left the workforce were now attending schools (Fairclough, 1996).
From the discussion it is evident that much needs to be done to curb human rights violations in chain supply production. The mere adoption of labor standards is not sufficient but rather regular monitoring from host countries, trade unions, and non-governmental organizations (NGOs) and international organizations. Global awareness and education stand among the strategies to use in fighting against human rights violations. For example, some studies have shown that global awareness can assist to alleviate the problem. More recent 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.
Corporate cooperation in the adoption of human rights standards benefit all persons in the business community because it offers equality in all areas of work and set an international example on social development and corporate involvement. When enterprises make the importance of worker's rights a priority by applying codes, guidelines, and standards, they are establishing a global awareness with the hope that other businesses will follow suit (Krage, 2007). Also, by making their efforts publicly known, companies are improving their corporate image. Society today has become more ethically conscience, and therefore when businesses emphasize their compliance with highly credible human rights organizations, they become appealing to more consumers and overall profitability.
Through promotion of business of cooperation, companies get the opportunity to develop socially and culturally while also improving their overall working environment. Established human rights standards creates stronger relationships between management, employees, consumers and society in general and also gives hope for a more promising future.
CHAPTER THREE: CONCLUSIONS
Human rights still remain to be one of the most challenging issues all over the world because of international variations in economy, politics, and 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 in large clothing retailers in their home countries and outside/developing countries.
This 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, larger clothing retailers and brand manufacturers were forced to source their produce and manufactured goods from low-wage, from the economically less developed countries such as India, China Indonesia etc . These less developed countries were in most cases characterised by child labour, forced 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 such as media, Non government organization, and International organization and government source countries. With constant pressure from media, activists, trade unions, customers, non-governmental organizations and multinational organizations, many cloth retailers had to succumb to voluntary labour standards. There is however much to be done to end human right violations in supply chain production. As noted earlier, the mere existence of voluntary labour standards does not solve the problem of human rights violations.
CHAPTER FOUR: RECOMMENDATIONS
Based on this report, the following are recommended:
1. Every firm should have a strong linkage between business ethics and corporate strategy, which ultimately affects the organizational purpose. The organizational purpose underlies all the operations of the company (both in the origin country and overseas). This calls for every company to have an explicit code of conduct strongly embedded in the corporate strategy or objectives.
2. Manufacturers and retailers should work with unions and non-governmental organizations (NGOs) to jointly engage in strategies that will promote compliance with codes of conduct. Labour rights are human rights, and therefore they are of social concern to both corporations and labour activists.
3. It is also recommended that labour laws reforms be carried out in all countries lagging behind in upholding human rights. The labour laws should incorporate and enforcement of codes of conduct that require basic labour rights and other human rights. A good example is United States where there are already a growing number of retailers that have developed protections in their contracted factories.
4. When labour standards have been set and agreed, it is recommended that there should be close cooperation between managers and employees so as to achieve the best results.
5. In order for the labour standards to be effective, there should be top-level management commitment to ethical business. Thus values held by top leaders and managers are central to achieve the desired results in upholding human rights.
6. Many studies suggest that the impacts of labour standards are still minimal. Therefore factory monitoring and c