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Finding an Anti-Sweatshop Strategy That Works

 

 

 

 

 

 

 

 

 

By Jeff Ballinger

(July 2009) THAT NEARLY twenty years of anti-sweatshop activism has come to naught is suggested by the cost breakdown of a $38 University of Connecticut hoodie that appeared in the Hartford Courant a couple of years ago: the workers received a mere 18 cents, while the university received $2.24 in licensing fees. (Mexican factory: profit, 70 cents; overhead, $2.12; material, $5.50–distributor [Champion]: overhead $5.10; profit $1.75–Seller [UCONN Co-Op]: overhead, $14.49; profit, $4.50). The workers’ share could hardly have been lower when the movement began.

Given the worldwide financial crisis, it is a safe bet that fighting sweatshop abuses here and abroad will not be a key policy undertaking for Barack Obama and his team. But this does not rule out a wide-ranging set of initiatives that would significantly empower workers. Tweaking our foreign assistance priorities, revising “democracy promotion,” and undertaking diplomacy from a community organizer’s perspective—these changes in U.S. policy would at least begin an assault on global sweatshop practices. And they are especially important as an antidote to the solipsism of Corporate Social Responsibility (CSR), wherein corporate “self-regulation” teams are rebranded as “activists” by lazy and compliant media. The new administration needs to connect with real labor activists, in Asia and Central America especially, and allow them to speak for themselves. 

But first we need to collect information on sweatshop practices abroad and make it available to activists, who often can’t collect it themselves. Twenty years ago, I worked in the small Jakarta office of the Asian-American Free Labor Institute (AFL-CIO). When my boss visited Jakarta, I described to him the radical inadequacy of the local minimum wage of 87 cents per day. By the Indonesian government’s admission, this provided only 68 percent of the “minimum physical needs” for a single adult. He suggested that I develop a project to monitor compliance with this inadequate minimum: were the workers even receiving 87 cents? USAID had recently made available funds for human rights grants; we applied and received something on the order of $20,000. The discovery of 44 percent noncompliance in 250 Jakarta-area workplaces was shocking and–to our great surprise and delight–avidly reported in the (mostly Suharto-controlled) newspapers. As a result of the publicity, workers began an unprecedented wave of wildcat strikes that resulted in much-improved compliance numbers.

The back-story is interesting. When the grant was discussed at a twice-monthly meeting where the Jakarta USAID Mission reported to U.S. Embassy staff, I was told that a buzz went around the room: “We’re helping who to do what?” Not surprisingly, AID officials received a similar message of disbelief from Nike’s top official in Indonesia after the strike wave and the attendant bad publicity. Did the local AID Mission pull back? It didn’t. In less than a year, I had approval for a grant of well over $600,000 for survey work that reached 172,000 workers; the number of strikes quadrupled, and the minimum wage rose steadily. But this momentum has not been sustained.

There is, of course, a lot of misinformation circulating, in addition to our common lack of information. Nearly all the academic literature on the subject claims that foreign investors pay better wages than local firms. How to explain, then, the fact that 85 percent of the 720 strikes in Vietnam last year were at foreign-investment factories? My talks with workers there in early 2008 confirmed my long-held suspicion that local firms were less abusive and less likely to cheat workers. Another example of misinformation is the work of Columbia University’s Jagdish Bhagwati, who, in 2000, induced 250 other economists to sign an open letter to college presidents, urging them not to give in to anti-sweatshop students’ demands because “the net result would be shifts in employment that will worsen the collective welfare of the very workers in poor countries who are supposed to be helped.” But the numbers from Indonesia tell a different story: when the wage was 87 cents a day, Nike had 20,000 contract laborers there; when the wage was $2.47—after five years of agitation—the footwear and apparel giant had more than 110,000 workers making products for export.

The lesson on the foreign-assistance front, then, is twofold: first, look for “empowering” projects to assist workers directly in local struggles and, second, use survey-research tools to build a database available to local legal aid groups and labor activists. What is most needed is information about dysfunctional governance, which has previously been unavailable to them.

WORKERS RIGHTS should be a fundamental principle undergirding both “democracy promotion” and our public diplomacy endeavors. The approach should be informed by the same caution that a community organizer uses to size up a neighborhood in distress, buffeted by multiple external and internal forces. It is surprising how little we know about how industrial relations play out in the world’s export-processing zones—even after twenty years of press reports and activists’ campaigns. A 2006 New York Times story out of China, for example, quoted a Communist Party report that asserted that there were 20,000 labor inspectors, 1.2 million audits, and over 8 million back-pay awards in 2005. That’s possible, but we really have no clue as to what is actually happening. (For comparison purposes, the United States has 750 inspectors for 130 million workers covered by the Fair Labor Standards Act.) 

Similarly, when a story about Asian workers being mistreated in Jordanian apparel shops appeared in 2006, the Times’s report quoted Yanal Beasha, Jordan’s trade representative in Washington, as saying that Jordanian inspectors monitor working conditions in factories and that the government enforces overtime laws and recently increased the minimum wage for citizens and guest workers. Several workers debunked the claim, but again, there is no reliable data on enforcement.

Obama said before twenty thousand people at Prague Castle, “Rules must be binding. Violations must be punished. Words must mean something.” These standards should apply to governments that oversee vast export-processing zones, as well as to dictators bent on nuclear extortion.

Addressing the rule of law as applied to the workplace ought to be a slam-dunk for the president and our recently re-energized State Department, even given the fact that such a worker-advocacy platform may discomfit countries such as China (our banker), Turkey (prone to nationalist tantrums), and Bangladesh (which has a host of stability concerns), just to name a few. For far too long, autocratic regimes have been getting conflicting advice from American policy makers. The boiler-plate nostrums involving multiparty democracy and clean government made little practical sense when China, pre-reform Indonesia, and Vietnam were experiencing growth rates in the double digit range. The off-the-charts venality of these states mocked the World Bank’s decade-long focus on fighting corruption. That the boiler plate wasn’t serious was signaled in many ways; now is the time to change the signals.

At an appropriate venue—such as a gathering of trade unionists and labor rights activists in Mexico or Thailand—Obama should outline the ways in which workers are grievously disadvantaged in the global economy. Activists across the globe would be thrilled to hear an American president calling into question such neoliberal tenets as the “flexible” workforce and the necessary “reform” of national labor codes—these two together have opened the door to a noxious insecurity of employment. Specifically, he could cite the World Bank’s “competitive index,” which ranks countries higher for ease of hiring and firing, reduced severance benefits, and other employer-friendly policies. Particularly egregious is the recent study funded and heavily influenced by the World Bank. Its report concludes that workers have to sacrifice even more than they have already in the name of economic growth. Organized as the Commission on Growth and Development, it made the astonishing discovery that the developing world’s workers are over protected. The report includes a discussion about how governments need to “mollify the influential minority of workers” in the formal, wage-paying sector. Hence the need for “special zones” with reduced protections—at best, somewhere in between the formal sector and “informal” destitution. The overall findings were praised in a Wall Street Journal article arguing that “there is room for countries to ape the Chinese model.” A 2007 Brookings Institution publication similarly prescribes “ease of hiring and firing” as a primary “condition for maximizing growth.” These are the policies that produce a worker’s eighteen-cent share of a $38 hoodie.

It is clear that a new architecture of rights must be erected, beginning with a no-nonsense survey of current practices. Every labor attaché or labor reporting officer at an American embassy should compile the following facts: Has the country signed International Labor Organization Convention 81 (Labor Inspection)? If so, when is the last time a report was sent to Geneva? How many labor inspectors are there? How many factory inspections were done last year? What is the number of violations found? How many prosecutions started? How many back pay awards were made? Similarly, on the environmental side, statistics need to be collected on factories visited, citations, and types of hazardous waste. And our attachés should also map out the bureaucratic chain of command, with names of responsible local officials and an account of who reports to whom. U.S.-based companies importing more that $50 million worth of goods should have to post these findings on their corporate Web sites—in both English and the local language—for every country in which they have more than three contract factories.

All the inspection/enforcement statistics should be folded into a matrix maintained by a nongovernmental organization working under a several-year grant from the State Department’s Bureau of Human Rights, Democracy, and Labor. Alongside the raw numbers, wiki-style narratives should be included on such issues as freedom for NGOs operating in the labor sector, labor history, recent strikes, opinions on the adequacy of the minimum wage, academic papers on all these issues, and contact information for unions and activist groups. Such a program would make possible a global dialogue about key issues. For example, a recent law change regarding severance pay in Colombia addresses the most recent wage-cheating tactic employed by multinationals (declaring bankruptcy and skipping out on substantial payments due to workers); the Dominican Republic has trained lawyers to act as labor standards inspectors but as mediators not in the familiar command-and-control mode. We need to know how this is working out. Again, Bulgaria appears to be quite serious about labor inspection and tracking worker complaints to authorities—we should pay attention to such initiatives.

OBAMA COULD make a very significant contribution to an urgent global problem for which the Bush administration spent upward of $500 million without much effect—“Trafficking in Persons.” The “action” up to now consisted mainly of getting legislatures around the world to pass laws on trafficking; it’s a good bet that the number of lawyers and consultants employed dwarfs the number of organized crime leaders captured. This fact did not restrain the Bush team’s fiery rhetorical pronouncements: the United States and its allies would “stop at nothing to end the debasement of our fellow men and women… the defeat of human trafficking is the great moral calling of our time.” Forced prostitution is the most well-known form of trafficking, but factory workers are also trafficked—and then sweated in legal or illegal shops. It is time to forgo the rhetoric and think about practical efforts to stop trafficking, with reliable benchmarks on our progress.

Officials might start by going after the low-hanging fruit, borrowing from the concept of “low obligational ante” developed by Abram and Antonia Chayes in their writings about getting respect for international agreements across a wide spectrum of countries. For over ten years, it has been common knowledge that foreign workers are being shipped across national boundaries to do factory work, often making products for export. Only last year, an award-winning television exposé interviewed Bangladeshi and Vietnamese workers producing Nike T-shirts in Malaysia in familiar, appalling conditions exacerbated by ruthless labor contractors. It would be simple for the State Department to organize a briefing on “trafficking” for all corporations that know or suspect that similarly vulnerable workers may be producing products anywhere along their supply chains. Those businesses whose executives do not attend—but are reliably implicated—should go to the top of the “watch list.”

The benefits of such a strategy are threefold: Local governments in Asia and elsewhere would see U.S. embassy officials visiting cheated and abused workers; local NGOs would see an administration unafraid to antagonize U.S. firms, and, most important, cheated workers might win compensation, thereby emboldening other workers.

Eventually, such a no-nonsense strategy would undermine the booming Corporate Social Responsibility industry. The shallowness and deceit of the CSR farce may be clearly observed in press reports. The Financial Times, for example, ran a headline, “Nike to promote workers’ rights” in mid-2007, and a news report on Nike in the same paper the very next day described “a push to promote labour rights, including the freedom to form and join trade unions.” This at a time when Nike itself reported fourteen strikes involving tens of thousands of workers. In reality, there is no collective bargaining going on at any shoe or apparel factories in the developing world. A Chinese group released a report in 2007 that underscored this point. It was an assessment of union rights in a factory producing for Reebok where–with much fanfare in 2002–Reebok had persuaded a contractor (the Shun Da Sporting Good Corporation in Fuzhou) to allow a secret-ballot election for union representatives: “The results of the [2007] investigation were extremely disappointing. Working conditions have deteriorated noticeably, and the trade union is doing more or less nothing to further workers’ interests. Interviews with workers uncovered widespread dissatisfaction and distrust towards the current union” (China Labor News Translations).

For weary observers of corporate-dominated globalization, it will come as little surprise that the coordinator of the World Bank’s aforementioned growth commission is economist Michael Spence. Until recently, Spence was the dean of Stanford’s business school–holding a chair endowed by and named after Nike CEO Phil Knight. A decade ago, while a member of Nike’s board of directors, Nobel-laureate Spence told a group of business school students in Singapore that global firms “make nothing” and that corporations must be “ruthless and not tell people you can do it in-house when out-sourcing would do a better job.” 

This is the real CSR at work, and it goes a long way toward explaining the failure, so far, of anti-sweatshop activism. 
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