How is it that fifteen years of anti-sweatshop activism failed both consumers and workers so miserably?

Aug 03, 2008

The dramatic emergence of the sweatshop story could be described as a “global political economy” train-wreck. Just as the big-name brands and department stores began outsourcing all of their production to contractors, the industry was moving to the most corrupt and repressive places in the world. At about the same time, changes in information-sharing technologies made it possible for activists to link up with nascent unions and groups of protesting workers. While business school case studies were heaping praise on corporations for shedding responsibility for manufacturing, the seeds were being sown for a tremendous upheaval that would come to fruition once the contractors’ brutal practices were exposed.

When executives at transnational corporations (TNCs) awakened to this tacit alliance forming between Third World workers and rich country consumers, it became a top priority to change the media frame. During a period in the late-1990s, for example, Nike, Inc. built up its Corporate Social Responsibility (CSR) department to over 90 staff, while other departments were suffering lay offs – due to declining sales not unrelated to the sweatshop story. Around the same time, Phil Knight, the company’s CEO, requested a meeting with the editorial board of The New York Times newspaper. Bob Herbert, an opinion columnist, had written several anti-sweatshop columns, three of which had featured Nike workers from Indonesian factories (who had been sacked for leading protests). Herbert explained to me that the CEO complained about the critical (and quite moving) columns and asked the editorial board if it had any control over what columnists chose to write about. Though the board replied that it did not, Herbert ceased writing about sweatshop issues after that meeting.

Knight’s Nike and other sweat-stained TNCs were greatly aided by the 1996 Clinton initiative, the Apparel Industry Partnership (AIP). Chief among the demobilizing outcomes of the AIP were: two big unions sitting with industry operatives and their lawyers for 26 months; elevation of the “self-regulation” idea (factory codes of conduct and “social audits” of suppliers) to constitute a “best practice” and a concomitant de-emphasis on livable wages for cheated and abused shoe and apparel workers. It is not too much of a stretch to describe the unions and NGOs sitting in the AIP as partners in what Clinton and Labor Secretary Robert Reich described as a way to guarantee consumers “sweat-free” garments, but was actually “buying time” for the worst of U.S.-based shoe and apparel brands.

The anti-sweatshop movement had expected the globalized labor movement to either lead or follow in the campaign; instead, they got in the way. The Sialkot soccer ball (child labor) controversy was a pivotal moment in changing the media frame and it demonstrated fully how disempowering the “code of conduct” strategy was. Because the anti-sweatshop movement lacked a power center, it depended on ju-jitsu; Nike’s own promotional strategies were turned into counter-narratives as Indonesian workers were juxtaposed with the company’s brand strategy of depicting strong women in advertising. While the lack of a power center enabled activists to pose a daunting rhetorical challenge to sweatshop globalization, it made the groups vulnerable to the Clinton/Nike “divide and rule” strategy. The environmentalist/businessman/author, Paul Hawken, told me that corporations (and the government, in this case) isolate and marginalize their most implacable critics by inviting any group that is willing to join in a “dialogue”. This is quite a thorny issue in movement politics and I had suffered attacks for attempts to “split the movement” (1998-2000, when it still mattered) as a fierce critic of government-business-NGO-trade union partnerships.

One grim graphic in the Hartford Courant (late-2005) tells it all: the Mexican workers making a $38 UConn sweatshirt shared a mere 18 cents (the University earned almost $2.50). Could this have been any lower ten years earlier, when the “sweatshop” story broke big? How, then, did the apparel TNCs vault into the upper echelons of “responsible” corporations?

“Compliance” is really a big business now, but what an infernally vague and opaque system! Businesses bought time – about the first three years – concocting standards and oversight processes. For the last three years, armies of these companies’ consultants have been plaintively arguing at meetings around the globe that there were too many standards and processes to reasonably guide suppliers. Some business observers see the “compliance” house of cards about to tumble. A leading journal for purchasing and supply-management professionals put it this way:

A recent report found ethical buying codes have done little to improve factory conditions overseas. For a decade now, companies have relied on these codes and on-site audits, safe in the belief they are doing the best they can to improve conditions for workers in their supply chains. But research published in October threatens to strip firms of this refuge, exposing the reality that more must be done if they are to make a genuine difference. (Supply Management April 2007)

Not to worry, according to the CSR “industry.” It sees nothing but more-profitable times ahead: “CSR shifted from the periphery to the mainstream in 2005; in 2006 it dominated headlines and catapulted into the heart of our collective consciousness.” (CSRwire)

Is it possible to win decent wages for garment and shoe workers without unions? According to Bud Konheim, garment executive, interviewed about ten years ago, “In this industry, the only reason to change is because someone has got a great cattle prod that keeps jabbing you in the rear end.” People in the industry acknowledge, when they’re honest, that the “default position” of low-skilled manufacturing is exploitation and vicious cost-cutting. Similarly, Francis Fukuyama (from the political Right) describes the natural reaction of workers to Taylorist production arrangements: “trade unions respond with demands that employers specify their duties…since (employers) could not be trusted to look out for the welfare of workers.”

The very fact that workers in Vietnam overrode the government-controlled trade union in yet another strike at a Nike-producing factory (mid-2006) speaks volumes: these workers aren’t getting paid enough and are demanding attention that CSR in any of its various forms is not going to provide. Dr Liu Kaiman, of the Institute of Contemporary Observation in Shenzhen, China: “The retailers and their suppliers are playing an elaborate game. They only want to reassure customers, not to improve conditions.”

The CSR cost for Nike is about $15 million to $20 million a year, merely for the CSR staff and expenses, to go to “sustainability” and “triple bottom line” (financial, social and environmental assessments) meetings all over the world and to pay for several hundred third-party factory audits. They must have two or three Nike people at every meeting; that’s part of the CSR game and how a company shows “real commitment.” My research shows that about 75 cents per pair of shoes to the worker would be needed to fix problems that workers have been complaining about since the 1980s. That is roughly 80% more to workers, or $1.80 on a $70 pair of shoes at Foot Locker. If Nike, instead, paid workers that 75 cents more per pair of shoes, the cost to Nike would be $210 million a year compared to the much lower CSR cost of less than $20 million.

Government-backed “human rights” reporting may also be blamed for much of the misleading information presently circulating on “self-regulation.” Take this example from the study published at the University of Iowa’s Center for Human Rights: “Promoting International Worker Rights Through Private Voluntary Initiatives: Public Relations or Public Policy? A Report to the U.S. Department of State” by Elliott Schrage, a business school professor who has held CSR posts at several corporations that have felt the wrath of activists. In an exhaustive review of every press release and meeting report, his 2004 article outlines the Sialkot, Pakistan/soccer ball/child labor controversy, but the essential clash of interests is relegated to a single footnote. When the controversy arose, the World Federation of Football Clubs (FIFA) had immediately sought advice from the International Confederation of Free Trade Unions (now, ITUC). Within months, a tough set of standards (including bargaining rights for workers) was developed for TNCs that wanted to continue using the FIFA stamp of approval (not a small matter, as approval means the de-facto “regulation” ball, certified for match play). The global sportswear brands, however, formulated a much less onerous intervention which FIFA ultimately adopted, after Adidas, Nike, et al pointed out how lucrative the “replica jersey” was for football club owners. It was funded primarily through government grants yet it included no provision for labor law enforcement by authorities in Pakistan. Instead, there were “international” inspection teams set up under the now-common model of “social audit” self-regulation.

The monitoring scheme cost millions and was worth nothing, from a worker-empowerment standpoint. Realistically, only gaining higher wages through collective bargaining would have had a serious impact on the region’s child labor problem. This was what the international outcry demanded and it was the path that the FIFA had initially embarked upon. It must be said that thousands of children benefited from the Sialkot Project (SP) inasmuch as they had access to education opportunities, many for the first time. This well-intended appendage, however, became the tail that is wagging the SP dog.

In mid-2006, Nike ended a sourcing agreement with Sialkot’s leading producer, Saga Sports – a move that might cause the layoff of thousands of young Pakistanis. Nike’s explanation included evidence that even the most basic elimination-of-child-labor provision of the SP code had been traduced, despite 8 years of ILO, UNICEF, Save the Children (etc.) monitoring. This is a stellar example of “re-defining success”. First, the demands of the international human rights community (for worker-empowerment) were turned aside in favor of a code/monitoring scheme; soon thereafter, educational outreach was (implicitly, at least) substituted for difficult and more costly progress in workplace relations.

Searching through the vast output of CSR-related initiatives, proposals and commentary, two things jump out: denigration of the idea of “union as solution” and a quite-small collection of promising ideas. Foremost among the latter is the suggestion by CUNY business professor, Prakash Sethi that multinationals and their contractors need to make “restitution for years and years of expropriation of wages of workers who are at the bottom of the food chain and are least able to defend themselves.” This simple idea could usher in a paradigm-shifting chain reaction. The big buyers would be moved beyond accepting blame to accepting responsibility – including financial liability – and courageous workers who stood up to abusive bosses would (better late than never) win cash-in-hand payments for tens of thousands of those cheated workers. Most important, perhaps, would be the resultant pressure on recalcitrant “host” governments that failed to protect workers in the first place.

Another idea worthy of further exploration is the approach of the Worker Rights Consortium (WRC), the only monitoring operation of any size that has remained out of the grasp of corporate overseers (small local operations such as Central American human rights groups COVERCO and EMIH do admirable work, but the impact is limited). WRC has propounded a plan that would steer university bookstores in the direction of “better” garment shops. Though students have won agreements at more than thirty schools, it is difficult for the WRC to recommend even a small number of “better” suppliers – mostly due to the lack of real collective bargaining.

Unsurprisingly, a “slowly, slowly” attitude prevails at the Fair Labor Association (FLA – what Clinton’s AIP morphed into), another monitoring organization with colleges and universities as dues-paying members, but with major funding from big apparel brands. Choosing his words carefully, Auret van Heerden, president and CEO of the FLA denounced the WRC’s idea, “If they do choose to form a trade union, that usually involves a long process of recruiting members and building an organization. The negotiation and signing of a collective agreement is also a process that cannot be reduced to a requirement.” (The Designated Suppliers Program would be imposed upon suppliers) “in an undemocratic way without a minimum of consultation.”

The key problem, of course, is that developing world workers see almost no examples of unions actually delivering some benefits or higher wages. They are justly reticent in joining. Reduced to its’ most elemental, the reasoning is something like this, “You must show them the gula.” (“Gula” means sugar in Bahasa Indonesia.) These were the words of the governor of S. Sumatra province when the head of Indonesia’s official union came on a “recruitment drive” in the late-1980s. One former-military Suharto-appointee to another, the message was clear – you just have to give workers some reason for joining!
While suppliers may claim to buyers, then, that the workers associational rights are (somewhat) respected, they have done everything in their considerable collective power to thwart actual bargaining. Recently, in Thailand and the Dominican Republic (there are other cases) workers did win reasonable gains, only to see the factories closed.

The “external affairs director” of the Nike-funded (now defunct) Global Alliance for Workers and Communities decried, “…the ‘culturally imperialist’ assumption that the form of politicized trade unionism and adversarial industrial relations prevalent in North America is directly transferable to, and desirable in Asia.”

While it’s totally axiomatic to say that production decisions will always be made to increase profitability, I think that it must be said, since there is so much hoo-ha about corporations’ new “social” side. Just look at Patagonia. When founder Yvon Chouinard speaks at a business school he is accorded rock star status. Is it because he makes cool things that enhance outdoor fun? Only partly. I think the primary attraction is that he portrays himself as the “reluctant capitalist” (sub-title of his 2005 book) and a contrarian. Would you not expect this self-described ’60s person who “likes breaking the rules” to have some positive impact on the garment industry, where most of his profit comes from? His book mentions “wages” only once (and not about apparel workers) and there is only the briefest mention about selecting factories that have “healthy relationships with their workers”. While he does mention that they audit supplier factories. But no audits can be found on the Patagonia website (contrast with Timberland that had lots of audit reports posted, until very recently).

Looking for some clue about Patagonia suppliers, a web search shows that the Fair Labor Association (FLA) has several, though nothing very recent. Two from 2004 (Thailand and Dominican Republic – no factory names or addresses and the DR one is marked “coming soon”) and three from 2003 (Malaysia, Thailand and U.S. – the U.S. factory did not even have a copy of the Code of Conduct). It’s as if you sent your daughter off to college three years ago and she comes back with 2 B’s an F and 16 incompletes!

Former Patagonia CSR guy, Kevin Sweeney, is now a successful consultant, doing work for Nike, Nokia, HP (etc.) and teaches some at UC Berkeley’s Haas School of Business. In 1998 (when he was Patagonia’s guy on the FLA), he wrote an Op-Ed for the L.A Times: “We Can Work Up to a Living Wage”. In it, he describes critics of the FLA as “orchestrated by the lobbyists of UNITE” (the garment union, now UNITE-Here) and whose obstructionist tactics would likely prolong the misery of 250 million working children (!) But let us focus on the decidedly non-contrarian defense of a non-living wage. Based on his Op-Ed, I can imagine the hang-tag for a pair of Patagonia surf shorts: “Paying the Thai workers that made this product an additional forty cents would bring them up to a living wage and that is the right long term strategy.”


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