The future of labour rights: Corporate accountability and fair trade
Globalization undermines basic labour rights in many developing countries. As a response many NGOs are looking for alternatives to current international standards and laws. Instead of weak ILO regulations, which many countries neither ratify nor enforce, corporations are held directly responsible for the working conditions in their factories and the factories of their subcontractors. One way to improve labour rights are the so-called Codes of Conduct. These codes usually expess a commitment by an individual company to certain workplace regulations or a labeling organization which independently monitors a framework of rules its members agreed on.
Codes of Conduct can be seen as a strategy to strengthen workers' rights as they usually apply to all workers of a particular company and its subcontractors across national boundaries. In times when basic labour rights are undermined in many countries and production increasingly moves to these countries this can be an important tool for corporate accountability. However, existing codes are often very basic commitments which do not always include even the standard ILO requirements. Furthermore, monitoring is insufficient, allowing companies to violate the commitments.
Another answer to the exploitation of workers are the various fair trade initiatives. They often support local co-operatives instead of multinational corporations. Globalization has left out many small-scale farmers and home-based workers who are at the bottom of the global production chain. Most fair trade initiatives subscribe to similar basic principles: products receive a fair price, substantially above current world market prices; forced labour and child labour are not allowed; health and safety conditions at the workplace are good; producers can obtain technical and sometimes financial help; the fair trade organization and producer deal directly with each other and establish a long-term relationship; all activities of the producer are monitored independently. Nowadays fair trade products include a wide range of products from coffee to clothing and household items.
The inherent link between labor rights and trade is well recognized. The Bipartisan Trade Promotion Authority or “Fast Track” authority, signed into law by President Bush on August 6, 2002, establishes among the overall negotiating objectives for all future free trade agreements to which the United States is party “to promote respect for worker rights.”2 Perhaps in recognition of this general objective, CAFTA’s drafters included labor rights provisions. For the reasons set forth below, however, we conclude that those provisions are fundamentally flawed.
Codes of Conduct are increasingly favored by MNCs and governments to deal with labour rights, but confusion exists among workers and NGOs about their pro and cons. This paper explores the background, role, limitations, advantages, and main features of the codes. It also studies a number of examples from the apparel and sportswear industry (pdf-file).
While Codes of Conduct can be useful as a means of exerting leverage on management, the key issue is the workers’ own level of organization and ability to carry out collective bargaining. While NGOs can play a role in facilitating the organization of groups where trade unions are traditionally weak, such as women, child workers, home workers and the informal sector, they must not seek to replace trade union organization.
While voluntary codes of conduct should not be viewed as the answer to sweatshop practices, they could potentially be one tool among many to promote adherence to minimum labour standards. In the era of globalization and trade liberalization, voluntary codes have the advantage, of extending the application of labour standards across national boundaries, across governmental jurisdictions and along international corporate supply chains. Corporate acceptance of ILO standards through voluntary codes could therefore help strengthen the authority of the ILO and the potential for international labour rights enforcement mechanisms.
This report contains an overview of initiatives on monitoring and verification of codes of conduct in the agricultural sector, with emphasis on the coffee sector. It outlines e.g. the goal, the instruments used, the partner organizations, requirements to participate, span of impact, and environmental and social standards of each initiative (pdf-file).
As a consequence of the introduction of Codes of Conduct some showcase factories have cleaned up their operations, but in general wages continue to fall and dangerous working conditions still prevail. Independent monitoring not always helps as MNCs often just excuse the error or cancel the contract, resulting in workers being sacked while the company transfers the contract to an unknown factory.
While monitoring labour standards PwC auditors found minor violations of labour laws and Codes of Conduct. However, the auditors missed major labour practice issues. Auditors failed to note hazardous chemical use and other serious health and safety problems, barriers to freedom of association and collective bargaining, violations of overtime and wage laws and timecards that appeared to be falsified. As a consequence, the report recommends that monitoring firms must become much more transparent and accountable (pdf-file).
The growing number of international agreements for labour standards with a particular corporation is a step forward for international trade union organizations, which are now beginning to feel that they are influencing the policy of some companies in this area. However, while the principle of establishing basic labour rights for a group's employees worldwide is an important one, it is the issue of compliance which is the most problematic.
Aside from violations of Chinese labour law regarding wages and working hours, this report reveals that each individual company’s Code of Conduct is poorly observed. It is particular striking that in most cases neither the management of the factory nor its workers are aware of the existence of a Code of Conduct and often do not even know what a Code of Conduct is (pdf-file).
'Expansive promises about the potential of trade liberalisation through the WTO have failed to materialise in terms of more and better jobs and higher growth either worldwide or in developing countries', says the Global Unions Group in a statement to the WTO. August 2005.
FLO is the worldwide Fairtrade standard setting and certification organization. It permits more than 800,000 producers, workers and their dependants in more than 45 countries to benefit from labeled Fairtrade. FLO guarantees that products sold anywhere in the world with a Fairtrade label marketed by a national intiative conforms to Fairtrade Standards and contributes to the development of disadvantaged producers.
The Fair Labor Association (FLA) is a non-profit organization combining the efforts of industry, non-governmental organizations (NGOs), colleges and universities to promote adherence to international labour standards and improve working conditions worldwide. The FLA represents a multi-stakeholder coalition of companies, universities and NGOs.
The Ethical Trading Initiative (ETI) is an alliance of companies, non-governmental organisations (NGOs) and trade union organisations. ETI promotes and improves the implementation of corporate codes of practice which cover supply chain working conditions. Its ultimate goal is to ensure that the working conditions of workers producing for the UK market meet or exceed international labour standards.
Social Accountability International (SAI) seeks to improve workplaces and communities around the world by developing and implementing socially responsible standards. To fulfill its mission, SAI convenes all key sectors (including workers and trade unions, companies, government and NGOs) to operate consensus-based voluntary standards. It accredits qualified organizations to verify compliance and promotes understanding and implementation of such standards worldwide.
This Dutch organization aims to promote humane labour conditions in the worldwide garment industry. This applies particularly to low-wage countries, where garments for the Dutch market are produced. The foundation is an initiative of business associations in the garment sector, trade unions, and NGOs. The tool that the Fair Wear Foundation uses to pursue this aim is a Code of Conduct for Dutch garment companies.
The US-based WRC is a non-profit organization created by college and university administrations, students and labour rights experts. The WRC's purpose is to assist in the enforcement of manufacturing Codes of Conduct adopted by colleges and universities; these codes are designed to ensure that factories producing clothing and other goods bearing college and university names respect the basic rights of workers.
The Commission for the Verification of Codes of Conduct (Coverco) is a Guatemalan non-profit organization dedicated to providing accurate and credible information about working conditions. Coverco conducts independent monitoring and investigations of workplace compliance with labour standards in Guatemala's major export industries for multinational companies and international organizations. Objectivity, transparency, non-substitution and independence are the principle tenets of Coverco's work.
The Global Alliance for Workers and Communities (GA) is a partnership of private, public and NGOs established in 1999 to improve the workplace experience and future prospects of workers involved in global production and service supply chains in developing countries. GA is currently working in 5 countries (China, India, Indonesia, Thailand and Vietnam) and reaching over 200,000 workers.