The Reality of cheap clothes: Reputation and Responsibility in South East Asian Garment Industries by Dr Fiona Donson

The tragic events in Bangladesh last week once again threw a spotlight on the harsh reality of sourcing products from developing nations. Yet it remains to be seen if this latest disaster will have any impact on the policies of transnational corporations and their customers seeking low priced goods.  Today, International Labour Day, the official death toll from the collapse of the Rana building near Dhaka was has passed 400, but estimates place the casualties as being over four times that figure. The facts of the disaster are in many ways typical of the story of factory operations in many developing nations. A largely unregulated industry operating in unregulated buildings, with limited health and safety laws and/or implementation, cramped working conditions, poor pay, and with limited unionisation.

Bangladesh has one of the lowest levels of labour unit cost in the world with a living way currently standing at US$64 a month. It therefore operates at the bottom end of the garment industry in an environment that regularly results in tragedies. As Human Rights Watch noted this disaster is a new event:

The Rana building collapse is the latest in a long list of factory building tragedies in Bangladesh, Human Rights Watch said. In April 2005, 73 garment workers died in a factory collapse in Savar. In February 2006, 18 workers were killed in a garment factory collapse in Dhaka. In June 2010, 25 people were killed in a building collapse in Dhaka. In November 2012, more than 100 workers died in a fire at a factory in Dhaka.

These large scale tragedies however, overshadow the day to day cost of cheap labour.

Yet Bangladesh has failed to come to terms with the problems within the sector. Human Rights Watch highlight that they have ongoing and well recognised problems with labour inspections – employing just 18 inspectors to monitor an industry employing over 3 million people. Companies are given prior warnings of inspections and the consequences of breaching the labour law are small and unlikely to act as a deterrent in the face of profits – the most common punishment is a fine of US$13 per case.

In this context, the role of unions is critical but the government has consistently worked to limit the right of workers to unionise. The factories within the Rana building were not unionised, and it is likely that no union would have stood by and allowed their workers to enter a building that had previously been evacuated on safety grounds. Yet, without such representation, employees were bullied back into a building that would collapse within hours. The environment for union activists within Bangladesh is dangerous and challenging as was noted in the International Trade Union Confederation 2012 report. Human Rights Watch highlight the following:

The April 2012 torture and murder of labor rights activist Aminul Islam, who had earlier been arbitrarily detained and tortured by government security forces remains unsolved. Over a dozen labor rights leaders currently face criminal charges on a variety of spurious grounds. The government has continued to pursue legal action aimed at intimidating the Bangladesh Center for Worker Solidarity (BCWS), a nongovernmental organization (NGO) that works closely with trade unions, and has arbitrarily revoked its NGO accreditation.

Although Bangladesh is regarded at the bottom end of the garment sector in South East Asia in terms of worker conditions, and cost, the picture elsewhere is equally troubling. In Cambodia, a country which has worked hard to market itself as having a responsible garment sector, similar problems have continued to dog the industry despite some progress made with the help of the ILO.

Flaws within Cambodia’s “ethical” Garment Industry

Central to Cambodia’s cleaner manufacturing image has been the cooperation between GMAC (Garment Manufacturers Association in Cambodia) and the ILO Better Factories Cambodia project. Established in 2001 Better Factories has a stated aim of benefitting workers, employers and consumers through the assessment and reporting of working conditions in Cambodian garment factories against both national and international labour standards. Operating on the basis of unannounced inspections, the results of which are then fed back to garment factory managers, the idea is to foster and development effective compliance. The project has been regarded as a success story, reportedly changing an industry bedevilled with a “sweat shop” reputation to one operating at the forefront of ethical manufacturing. It is a model that has since been exported to other jurisdictions such as Vietnam.

However, looking beyond the headlines, it is clear that the Cambodian industry, while clearly better than that operating in Bangladesh, is far from ethical. As John Hall has noted in his article A Viable “Sweatshop Free” Model? The ILO’s Better Factories Program and Labor Rights in Cambodia’s Garment Industry, enforcing on paper compliance with specific labour code requirements such as overtime is important, but ultimately limited in the face of larger political and institutional problems such as corruption, union intimidation and a failure to provide effective wage rises over time. In addition, on paper compliance has tended to ignore the reality of employer bullying of workers and the changed employment context.

The Community Legal Education Center, a Cambodian NGO with a long standing record of working on labour issues has regularly cooperated with the Better Factories Project. However, it is also a critic of the Project. In its 10th anniversary report on the Better Factories Cambodia, produced in partnership with Clean Clothes Campaign, it noted that “working conditions in Cambodia’s garment industry remain very poor generally”. Whilst the project has done nothing to address low wages – as Dr Jeroen Merk, Research Coordinator of Clean Clothes noted on the CLEC website

The real wages workers receive have actually declined 14 per cent since 2000 in relation to inflation rates. In other words, garment workers have become poorer since the Better Factories Cambodia program was launched. The ILO should do more to keep global buyers like H&M or GAP accountable for poverty wages.

After difficult negotiations, the Cambodian government forced GMAC and Unions to agree a settlement which comes into effect today, International Labour Day. The deal sees the minimum factory workers salary rise from US$61 to US$75 per month but the amount still fails to address the impact of inflation on the cost of living.

In addition, employment has shifted to short term temporary contracts and there are reports that workers are regularly threatened with non-renewal if they refuse to work overtime, or engage in unionised activities. No collective bargaining agreements have been agreed within the country, and the use of yellow unions, set up by factories to discourage real unionisation, is widespread within the industry.

In relation to unionisation, a key factor within the country remains the imprisonment of Born Samnang and Sok Sam Oeun for the murder of labour leader Chea Vichea in 2004. The two men were wrongly convicted in 2005 of the shooting dead of the prominent leader of the Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC). They were released provisionally by the Supreme Court in 2008 but re-imprisoned in late 2012 by the Court of Appeal to serve the remainder of their 20 year sentence despite overwhelming evidence of their innocence. NGOs and labour groups within Cambodia and beyond continue to campaign for their release, but fear that little can be done now, particularly against a backdrop of worsening human rights abuses and difficult labour issues in the country. The deeply disturbing miscarriage of justice highlights the vulnerability of union leaders and ordinary people in a system which cares little about the criticisms of national and international organisations. Indeed, Chea Vichea was not the last union leader to be murdered in Cambodia, Ros Sovannareth was killed in May 2004 and Hy Vuthy in February 2007, both were FTUWKC union leaders and to date no one has been brought to justice for their deaths.

The responsibilities of corporations and consumers

The final point to be made here relates to the responsibilities of western clothing firms and their customers. In relation to the Bangladeshi disaster, Primark, along with other companies, this week announced that it would compensate the victims. The package would include “long-term aid for children who had lost parents and financial aid to those who were injured.” At the same time, however, it continued to refuse to agree to an action plan on building safety.

The head of Oxfam Ireland, Jim Clarken, described the offer on RTÉ’s Morning Ireland as “a minimum gesture”, and he must surely be correct. Financial compensation may provide immediate and probably temporary aid to the victims, but it cannot and will not prevent further tragedies. Without a commitment to achieving real change in the operation of garment manufacturing in developing nations, transnational corporations continue to benefit from cheap manufacturing while accepting little real responsibility. In recent years there has been a trend for corporations to support local NGOs improving their ethical credentials. For example, both Adidas and Nike have a relatively long track record of philanthropic work. NGOs are often willing to take their money, and in challenging financial times there may be little choice with such financial support helping critical projects. Yet transnational corporations tend to remain reticent at best when it comes to critical questions of labour law and workers rights.

As to consumers, Shane Darcy’s excellent blog post earlier this week – The Price of Cheap Clotheshighlighted that 49% of those interviewed in a survey on responsible business in Ireland believed that purchasing power could affect the behaviour of companies, but that a majority felt they did not have enough information. In reality, the information is readily available if you choose to ask the question of where your clothes come from and who makes them. The issue is not an invisible one, with campaigners working hard to highlight the real cost of cheap clothes. But there are also the self-branded ethical claims of corporations, with their nice pictures and pet NGO projects that fail to provide the full picture of the impact of their business deals on developing countries. The question really is whether consumers are willing to recognise that they too are responsible for the cost of their low price purchases. People have to accept this by recognising that the real cost is more than just the cost at the till but includes the impact of cheap labour, poor employment practices, exploitation and worse on the lives of those who make their clothes in places such as Bangladesh and Cambodia.

I speak from experience having worked on projects in and around Cambodian garment factories. I have seen good factories and bad, and know from experience that transnational corporations can have a significant impact on the operations of their suppliers. In turn, those corporations impose those requirements because their customers have insisted on ethical trade practices that live up to their claims. Equally, it is clear that corporations do turn a blind eye to many of the employment and working condition practices that go on in such countries thus ultimately bearing some responsibility alongside the factory owners who decide to ignore building regulations and endanger the lives of hundreds of workers. Where does that leave the consumers who don’t want to ask those tricky ethical questions?