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While the global sportswear brands sponsor munificently to the world's top players and teams, the men and women in Asia who make these sportswear struggle to meet their families' basic day to day needs. And the major problem that is prevailing in this industry is the fact that the workers are unable to join or form unions without violence, discrimination, harassment, threats of dismissal. Government in developing countries is usually in fear to interfere in the behavior of the TNC's for the reason that they will lose investment and production to other countries.
The sportswear workers work for very long hours under dangerous and difficult working conditions. The argument about the above mentioned case deals with the steps that are to be taken by the companies in order to address the following issue - "the workers trade union rights"
This case tries to examine a leading international sports brand. This will help to understand and examine the steps that are to be taken by the companies to ensure that their suppliers in Asia allow the workers to form trade unions which will improve the labor rights.
The following are few suggestions which will be discussed in detail
Approachable ways to report about the exploitation
Educating the workers on their rights
Proper channel of communication
Regulated purchasing practices
Companies should not source their products in countries where trade union rights have no legal force
Meaning of labor rights
"The body of law that governs the employer-employee relationship, including individual employment contracts, the application ofÂ tortÂ and contract doctrines, and a large group of statutory regulation on issues such as the right to organize and negotiate collective bargaining agreements, protection from discrimination, wages and hours, and health and safety."
Why focus on labor rights?
The sportswear is not produced directly by the companies; instead they are out-sourced to various sub-contractors. They are out-sourced to developing countries because of minimum wages and other such reasons. People who are working in these industries are forced to work for longer hours under poor and dangerous working conditions. The workers are exploited. Therefore, it is the need for the company to protect the employees and respect the labor rights. By labor rights, it means the right to bargain collectively and the right to join trade unions. The trade union rights not only have the duty to protect the employees but also to adapt to the business strategies and structure to meet the needs of the changing work environment.
In 1984, Nike corp. closed its last factory in America and moved its entire production to Asia where cheap labor is available in plenty. The reason for this overseas move is because in countries like Indonesia, Vietnam, Thailand and Pakistan the unions are not legalized and the wages are low. Therefore, Nike immediately began to search for new countries. Initially Nike produced its own products. But later, Nike started to out-source the products to sub-contractors.
There is a lot of criticism about the sub-contractors of Nike. Lot of NGO's have repeatedly attacked the company's reputation by saying that Nike involves sweat labor. Nike took a lot of initiatives like creating a code of conduct for customers, by hiring third parties to monitor the code of conduct, etc.,. Nike's defense statement is that, they don't have control over the sub-contractors. But the fact is that each and every activity which takes place in the production process is controlled by Nike.
For example, Nike's production in Indonesia is a serious issue. The workers in Indonesia are teenagers and young women from ages 17-30. They are given only a minimum wages, along with a small area to live in. These living areas are not well equipped. The living condition is very poor. The wages which they earn are not sufficient for them even to spend on their day to day needs.
Labor unions in Indonesia do not have any negotiation power on behalf of its workers without the permission of the Government. This becomes an advantage for the sub-contractors. Whenever, there is any minimal strike by the workers for their rights, the Nike's contractor call in the military. This ends in violence. Workers who fight against their rights or whoever participates on the strike are automatically fired. Some of the other cases are sexual and physical abuse.
The above mentioned example of Nike clearly states that the labor rights are not respected. It's not that Nike can't employ its own workers and pay them more, they just don't want to.
In order to understand the importance of labor rights, we need to know the reasons why or how the sportswear business structure leads to poor working conditions. The problem starts with out-sourcing the production to low-cost countries. Their main motive is to minimize the cost and maximize profit. The companies even shift the packing, warehousing and other similar costs to their suppliers to minimize their inventory cost. This leads to aggressive buying practices. In such conditions, the contractors are left with no other choice than to hire workers who are exploitable. Exploitation here refers to low cost and easily hired and fired without legal implications. In order to complete the orders in time, the workers are made to work for longer hours and the policy of paying by price rather than time is followed to reduce the cost. To protect the contractors' interest, the workers are stopped from forming or joining trade unions. This ultimately leads to the bottom line harsh working conditions such as excessive working hours, poor wages, harassments, no freedom for collective bargaining, etc.,. The following may be one of the reasons
Gap between ethical commitments and purchasing practices:
As far as the staff that is responsible for the ethical policy of any company is concerned, they can continue to place the order by pressurizing the suppliers to deliver the goods speedily to reduce the cost price, and threaten to relocate. From the company's point of view, the common problem that is faced by the staff responsible for ethical policies is that there is a delay in getting the product to the point of manufacturing (i.e.,) there may be a delay in designing the product or there may be a product forecast delay by the company itself, etc.,. This delay is made to absorb by the suppliers. The suppliers or the contractors in turn shift these delays or risks on to the workers by increasing the working hours to meet the deadlines. When things go wrong or if there is any fault in the product, the workers are held responsible to pay the price.
These kinds of aggressive buying practices by the company make the suppliers very loath to permit workers to form or join trade unions. In factories where collective bargaining is practiced, the workers who have joined the trade unions have the right to take action against the company. With the tight delivery schedule of the suppliers, they are very reluctant of having to deal with workforce that has the power of collective bargaining.
The industry as a whole can come together with labor rights organizations such as ILRF (International Labor Rights Forum) to improve the value of labor rights. New policies can be laid down by these organizations keeping in mind the interests of both the company as well as the workers. In order to work this out, the following things should be practiced by the TNC's.
Transparency in social context implies openness or accountability. The sportswear TNC's should publish the address and names of the workplaces where their goods are produced. Most of the leading TNC's do not publish such kind of information because of the fear of being scrutinized. This kind of transparency will help to investigate the working conditions. It also helps the organizations such as ILRF to access the company and investigate the respect for trade union rights in that company. The TNC's should investigate on these issues out of their own interest and for the benefit of its employees with the help of third parties such as Ernst & Young and should release the report of the investigation on labor rights.
Companies should not source their products in countries where trade union rights have no legal force:
Lot of countries in Asia has the problem of regulation and control of trade union rights. Corruption is a serious issue in Asian countries. The labor courts are corrupted and they cannot solve the problem of labor rights until their problem gets solved. Moreover, the workers have limited financial means to access the labor courts. Companies should source their products in countries which give legal authority to the labor rights. By this way, the company need not interfere in the labor rights problems because the contractors in countries where labor rights are respected fall directly under the control and supervision of the government.
TNC's should ban the use of short-term contracts by the suppliers:
It is very important for the TNC's to look into this issue because the concept of "flexible" form of employment creates job insecurity. The workers are employed as daily workers with short-term contracts. This type of employment discourages the workers to organize trade unions because they fear that their contract is short-term hence there is no point in organizing trade union.
Companies should have their own board of expertise in labor rights:
Each and every company should have its own board of expertise in labor rights. This board should closely work with the company's top management and the trade union. This will help the company to understand and analyze more on the needs of its workers. This board can represent on behalf of the company and can make decisions relating to the demands of the workers. The board should act as a bridge between the company and the workers. Through this, a proper communication channel can be formed. The board may look into the code of conduct that is laid down by the company to its suppliers. If the board finds any violation of the code of conduct, it may report to the company. The board should publish annual report on the efforts made by the company to improve the working conditions of the factories where their products are made. This helps to create a positive impression about the company amongst the public. It should instill a complaint mechanism in each and every factory. The complaint mechanism should be set in such a way that the complaints are kept confidential and are easily accessible by the workers to report about exploitation. The board may keep a tap on the suppliers through following ways
Using a third party:
The board may seek the help of a third party to look into the complaints that are made by the workers. The third party may act as a mediator and can resolve the problem. By doing this, the suppliers will no longer take advantage of the situation. They may provide proper working conditions keeping in mind the fear of losing the contract.
Auditing and verification:
This system works on the basis of trust. The company may set up a new auditing system which may be based on the prospect that the factories themselves will see to that the violation of labor rights do not occur. Through this method, the company can audit the potency of this system rather than looking for non-compliance in individual issues. The company should conduct regular assessment in order to verify if whether the system is used properly or not. The important view of this assessment should be whether the workers have access to the knowledge and information about their rights. It should also make sure that the workers are able to access the complaint mechanism.
Educating the workers on their rights:
The companies should give training for its workers in freedom of association and collective bargaining. They should be given proper knowledge about the management and what is expected by them. The companies can work with the NGO's to plan and develop strategies for training the workers. The companies should make sure that the code of conduct and the labor rights should be posted in the workspaces. It should make sure that the suppliers provide training to its workers in accordance to the requirement of the code of conduct.
Lot of campaigns conducted by NGO's and other organizations has lead to some major changes in the sportswear industry. This has begun to address the key issues such as working conditions, trade unions, etc. If the sportswear companies are truly interested to protect the labor rights they should implement the following changes:
Proper labor-practices policy:
The companies should make sure that their suppliers and sub-contractors respect the labor-practices and implement the labor rights policies. Policies on proper wages, proper working conditions, regular working hours as prescribed by the government, no over time, freedom to join trade union, etc.,. Should be strictly implemented. They must see to that the suppliers instill these policies in their factories.
Promote the respect of workers
Effective labor rights policies
Strengthen complaint mechanisms:
Complaint mechanism is an important source through which the company can actually know as what exactly is happening in the suppliers' factories. Such a complaint mechanism should be used to bring the attention of the workplace concerns to the sourcing companies. Therefore, it should be strengthened and should be made confidential and accessible means to all the employees.
Though there are a lot of barriers in organizing or joining trade unions, the labor rights have never been more important. Sportswear industry is a labor-intensive industry where the workers exploitation is very high. Steps that are taken to improve the working conditions by the companies alone do not help to over the problem. There should be enough space to organize their own trade union and bargain collectively. Third parties employed by the companies can inspect the factories occasionally. During those visits, the suppliers warn their workers in advance to misguide the investigation process. Lot of power and control cannot be given to the third parties to improve the conditions because the improvement is dependent on the company's goodwill. If any mishap occurs, the company will be held responsible.
So, therefore these issues must be addressed keeping in mind the industry as a whole. By sportswear industries coming together, the problem can be addressed at a universal level and necessary policies and procedures to protect the labors rights can be outlined. Keeping those rules as a base the companies can improve their existing labor policies. Another important aspect is to create a proper communication channel between the company and the workers.
The suppliers should make policy commitments to respect and implement the labor rights policies. Policies and practices are contradicting terms in the sportswear industry. Because a lot of companies have their suppliers in countries where there is no legal force to labor rights. If the companies are genuinely interested to protect the labor rights, they should adopt a policy that they will out-source their products to suppliers who are from the countries where the labor rights are legalized. The example of Nike's production in Indonesia is very significant because the Indonesia's trade organization in recent years is witnessing a serious case of short-term contracts which make it difficult for the workers to organize trade unions.
Therefore, it is now the responsibility of the sportswear companies to undertake effective and comprehensive policies to ensure that the labor rights are protected. As mentioned earlier, transparency regarding the address and the name of the factory where the products are produced is very important. It becomes easier for the organization to investigate if whether labor rights are being practiced.
"In our glorious fight for civil rights, we must guard against being fooled by false slogans, as 'right-to-work.' It provides no 'rights' and no 'works.' Its purpose is to destroy labor unions and the freedom of collective bargaining... We demand this fraud be stopped". - MARTIN LUTHER KING, JR.