Rajeesh Chhabra, Ethical Corporation 9-07

Indian garment factories – Campaigners, courts, controversy

As two labour campaign groups prepare to be sued for libel, big brands continue to buy from the
jeans supplier taking the activists to court
For two prominent Dutch labour rights campaign groups, the Clean Clothes Campaign (CCC)
and the India Committee of the Netherlands (ICN), the past year has been a struggle to say the
least.

Both groups have been banned, since July 2006, from agitating, both in India and overseas, after
they allegedly defamed an Indian supplier of jeans to international brands including G-Star, Gap,
Mexx, Ann Taylor, RaRe and Guess.

Bangalore-based Fibers and Fabrics International (and its subsidiary Jean Knit) say they are the
victims of “cyber crime, acts of [a] racist and xenophobic nature and criminal defamation” from
the two non-governmental organisations.

As Ethical Corporation went to press, CCC, ICN and their European internet service providers
were preparing to stand trial for libel, with a first hearing of the case scheduled for 31 August.

In May 2006, working with local unions and labour activists, CCC launched a public campaign
against Fibers and Fabrics International and Jean Knit while alleging serious violations of labour
rights in two factories based on its investigations and worker interviews. CCC’s findings were
confirmed by a fact-finding mission made up of seven human rights and women’s rights
organisations in August 2006.

Irked by the reports, the suppliers first sued the local unions and NGOs and successfully obtained
court orders restraining them from circulating any information about working conditions in the
factories. Then, the suppliers sent a legal notice to CCC, ICN and their internet service providers,
Antenna and Xs4all, asking them to remove reports on factory working conditions from their
websites. When CCC and ICN did not oblige, the suppliers sued them as well.

Mohammed Ghiase, director of Fibers and Fabrics, says: “We are fighting for justice. Local
NGOs were spreading incorrect information about the factory even after we provided all the facts
to them. Taking them to court was the only remedy.”

Business as usual

For several months, CCC has been asking Fibers and Fabrics and Jean Knit to engage in a
dialogue – rather than legal action – with local unions and NGOs to improve working conditions
and labour relations. CCC has also been urging retail brands to put pressure on the suppliers to
participate in the dialogue.
But Ghiase says: “We have invited the Clean Clothes Campaign for a direct talk several times
and even now they are welcome to our factory for a dialogue and to see for themselves that
information supplied by local NGOs and unions is not true.”
All brands have written to the suppliers asking them to investigate, but have continued to source
from the factories. Only Tommy Hilfiger has threatened to withdraw business unless all issues
raised by the CCC are resolved.

In the court petition, the factory owners have used this to their advantage by saying that their
customers, which are reputed international brands, have repeatedly audited the factories and
found no violations or truth in CCC’s allegations.

An investigation by the local labour commissioner in December 2006 concluded that “the
complaint raised by CCC and others is malicious and not based on facts and reality”. This has
also helped Fibers and Fabrics and Jean Knit’s case. A local analyst says: “Brands’ behaviour in
this case is intriguing. Against conventional practice, they have continued to source from the
supplier. This may have emboldened the supplier to go after labour activists more aggressively.”

CCC accuses G-Star – the largest customer – of doing nothing to put pressure on the suppliers.
Critics say others have also merely paid lip service.

Esther de Haan of CCC says: “Suing all human rights organisations that report about working
conditions in the garment industry in Bangalore will not solve anything.”

Interestingly, apart from being compliance-approved by several brands, six factories run by the
same suppliers have managed to get SA8000 certification. Recently, the certifications were
suspended after CCC complained to Social Accountability International, the SA8000 standards
body.

Little reported by the national and international media so far, this legal battle has the potential to
seriously limit the role that unions, labour rights campaigners and civil society organisations can
play in exposing abusive working conditions in the notorious clothing supply chains of India.

Local observers fear that the ongoing case may set an example for other factory owners, who
might launch copy-cat suits against those who try to take up workers’ causes.

Stitches in time

· November 2005 – the Clean Clothes Campaign and the India Committee of the Netherlands
interview Bangalore factory workers, revealing alleged violations of labour rights.

· March 2006 – more interviews uncover further allegations of abuse, forced overwork and non-
payment of overtime.

· May 2006 – the two NGOs launch a campaign against supplier Fibers and Fabrics International.

· July 2006 – a court bans both NGOs from campaigning in India and overseas.
· August 2006 – human rights organisations back up the NGOs’ claims of factory abuse.

· December 2006 – Bangalore labour commission finds the NGOs’ claims “malicious”.

· August 2007 – the NGOs prepare to stand trial for libel.

Poulomi Mrinal Saha

11 Jan 07
Industrial relations – Frayed tempers in Cambodia’s garment industry

Industrial tensions could pose a serious threat to the future of the Cambodian garment sector. But
ILO and USAID initiatives offer hope that the situation can be repaired
In October, a weeklong strike by garment workers and unionists outside the Bright Sky garment
factory in Cambodia’s capital, Phnom Penh, got out of hand. The management called the police,
who allegedly used excessive force, injuring demonstrators including a woman garment worker
who was hit in the back by a bullet.

Human rights organisations laid the blame for the incident at the door of the Bright Sky
management and the police. But the Garment Manufacturers’ Association in Cambodia has a
different story.

Speaking to Ethical Corporation, Van Sou Ieng, chairman of GMAC, insisted that public
accounts of what took place are wrong. He says workers had organised a wildcat strike without
acknowledging any of their legal obligations and had forced about 1,000 workers from the
factory not to work even though they wanted to.

Van says workers attacked the management offices, which had forced the management to call the
police, who only fired shots in the air to calm the crowd.

In Cambodia, where on average there are three or four unions per factory, such industrial
disputes are common. In recent months, there has been growing confrontation between union
activists and garment factory managers, and the situation has become explosive on more than
one occasion.

Basic rights

The common issues raised by workers and their representatives during these confrontations are
wages, contracting practices, overtime and freedom of association.

In its latest report on working conditions in Cambodia’s garment factories, the International
Labour Organisation’s Better Factories programme has confirmed that, despite steady
improvement in the working environment, overtime acknowledgement and freedom of
association are two areas that need attention.
Foreign buyers that bring in more than $2 billion in annual business for Cambodia’s garment
factories are now expressing concerns over escalating industrial tensions.

Despite over 90% of factory owners complying with minimum wage requirements according to
the ILO, an increase in the minimum wage, recently raised to $50 a month, has been a common
demand from unionists. With prices paid by buyers steadily dropping in the past five years due to
shifts in the global garment trade, it is unlikely there will be a significant raise any time soon.

However, some experts say that the current minimum wage is a living wage, especially since
actual pay averages about $60-$70 at most factories, when incentives are included.

This compares well with pay in other occupations. And as workers are attracted to move into
urban areas where the jobs are, some of their pay flows back to the poorer rural areas from where
they came.

One expert told Ethical Corporation: “Teachers in Cambodia [only] earn around $25 monthly.”
On the other hand, “Garment workers can send, at least, 20% to 30% of their wages home to the
countryside.”

Cultural divide

Training local Cambodian workers is increasingly encouraged in the garment sector. With a good
number of factory owners and managers being of east Asian, ethnic Chinese origin, it is believed
that this cultural divide causes most frictions between workers and management.

To help resolve these and other issues, a $3.4 million USAID project trains garment workers in
good industrial skills and promotes better working practices within factories, with the aim of
increasing productivity.

Both the ILO and the USAID projects are aiming to bridge cultural divides. ILO Better
Factories, which has restricted itself to a compliance and monitoring role, will now move
towards facilitating a remediation process in relation to issues it discovers in its monitoring
activities, says Tuomo Poutiainen, chief technical adviser of the programme.

Useful link:
www.betterfactories.org

Better Factories Cambodia: a snapshot

ILO Better Factories Cambodia is a programme that involves international buyers, manufacturers
and unions from the Cambodian garment industry with a view to improving working conditions
at garment factories.

The programme was established in 2001 and is funded by the US Department of Labor, USAID,
Agence Francaise de Developpement, the Garment Manufacturers’ Association in Cambodia, the
government of Cambodia and foreign buyers.

Under the Better Factories programme, the ILO conducts unannounced visits to factories to
check compliance with Cambodian and international labour standards. The ILO checklist
consists of 500 items covering wages, child labour, freedom of association, employee contracts,
working hours, workplace facilities, noise control, machine safety and other issues.

After the visits, suggestions and observations are made available to factory management and
time is given for improvements. If suggestions are not implemented upon, factories are publicly
named and shamed in ILO reports. As part of the Better Factories programme, the ILO also runs
training modules aimed at improving work practices.

Columnist Malen Baker

Child labour in India – A moral red line set in stone

Demand for patio paving in the UK is being met by children working in Indian quarries. The
industry must act, says Mallen Baker
More and more people want their attractive gardens to be an oasis of peace for their children to
play and grow up in.

Yorkstone, which has been used for many years as a decorative stone for garden patios, is
increasingly being replaced by the nearly identical but cheaper and more plentiful Indian
sandstone. But the cheaper alternative comes with a price all of its own.

While the children of UK consumers play on those attractive patios, other children in India work
in the often illegal quarries producing the sandstone. This is the ugliest end of the reality that is
child labour – dirty, dangerous, unhealthy, hard manual labour.

If there is some ethical case for tolerating a certain amount of child labour in certain industries,
on the grounds that for a company to withdraw would leave the children concerned facing less
palatable alternatives, then this is one of those unpalatable alternatives.

Simply wrong

Even in today’s world of a more sophisticated understanding of corporate responsibility,

including strong business cases, there is somewhere a basic moral red line, and this lies on the
wrong side of it.

Child labour in the sandstone industry is not the exception – it is endemic. Up to 25% of workers
in Indian quarries are believed to be children, about a million children in total according to Anti-
Slavery International. These children can be as young as six. Many of the quarries are illegal,
and openly flout international labour standards and health and safety laws.

They are run with up to 90% bonded labour, where workers are forced into semi-slavery
conditions in order to pay off debt. This debt can be inherited, meaning that children can be born
into bonded labour. The fact that such labour was outlawed in 1976 does not seem to make a
great deal of difference.

Occupational diseases are common among quarry workers. Silicosis, tuberculosis and bronchitis
come from breathing in the dust. And poor conditions provide an ideal breeding ground for
malaria.

The marketing director of UK firm Marshalls, Chris Harrop, is passionate about the issue. When
we met recently, he showed me photos he took when, on a visit to a Marshalls’ quarry in
Budhpura, he was taken to see one of the illegal quarries nearby, the children who worked there
and the conditions they slaved under.

Seeing the reality

The FTSE 250 firm has consolidated its buying of Indian sandstone under one agent who can
either wholly own the quarries or will represent more than 85% of the business of quarries, to be
able to guarantee that proper working practices can be enforced. Harrop says grimly that this has
been the extent the company has had to go to – given the way that stone is bought and sold,
anything less makes it pretty much certain that stone bought has been produced with the help of
child labour.

There is a price to this – Marshalls simply cannot sell Indian sandstone as cheaply as competitors
that carry child-produced stone. And as things currently stand, there is no labelling scheme to tell
consumers what they get for that different price. If you want fairly produced coffee, you can buy
Fairtrade. If you want sustainably sourced timber, you get FSC certified timber.

But if you want sandstone not produced by a child in an illegal quarry? Currently you would
simply not know.

It seems more likely that new labelling will be more about carbon dioxide emissions than
working conditions – the move towards carbon labelling by some retailers might mean that the
differential will be expressed in this way first and foremost.

That would still help – Marshalls calculates that its Indian sandstone product generates 84%
more carbon dioxide than other product ranges that look like quarried Yorkstone but are made
from reconstituted concrete.

But that seems a poor way to go. We need to see the industry come together to agree what must
be done about a reality that anyone can see will not survive the growing scrutiny of the internet
age. Early action now to deal with the problem will stand the industry in good stead – slow and
grudging responses carry a terrible price. Whether you care more about the price in terms of the
ruining of young lives, or the destruction of corporate reputations, that is only a matter of detail.
Rachel Jackson, 6/07
Labour standards in America: A legal ban on sweatshops?

New anti-sweatshop legislation in the US may provide a setback to brand and retailer
collaboration on responsible sourcing initiatives, says Rachelle Jackson
On April 18, 2007, legislation was introduced into the US House of Representatives that would
ban the sale in the US of goods made in “sweatshops”.

The “Decent Working Conditions and Fair Competition Act”, would not only ban the
importation of some goods but would also allow US retailers and their investors to sue
competitors who import or sell such goods.

Retailers who are participating in joint initiatives may then have to consider whether the
information they are sharing could be used by a competitor to sue them, says Michael Levine, a
partner with the law firm Epstein, Becker & Green.

If passed, the Act may have the unintended consequence of stifling efforts at sharing social audit
data or discourage entry to multi-stakeholder initiatives, especially for companies in which legal
counsel takes a leading role in responsible sourcing programs.

The bill may even impact transparency, reversing a trend where more and more companies
publish reports on labour standards and supplier performance.

In 2003, Gap made headlines around the world with a social responsibility report that detailed
their identification of and work to eliminate child labour and other labour issues.

Since then, other companies have followed suit, reporting on the number and types of violations
found in their overseas factories during monitoring visits.

Faced with legal liability for goods manufactured in contravention of core labour standards, this
type of transparency and reporting may disappear altogether.

The proposed Act is intended to block the sale of goods made by sweatshops and eliminate any
competitive advantage a company may have had by using a sweatshop, with penalties that
include a $10,000 fine per violation plus the threat of litigation from competitors.

Sweatshops are no longer limited to shady clothing shops, either. Under the bill, “goods” include
any wares, articles or merchandise that are mined, produced, or manufactured, which would
include diamonds, jewellery, computers, cell phones, toasters, flowers, and almost anything that
can be consumed.

Many of these sectors, including toys and electronics, among others, have undertaken joint
initiatives that encourage brands to work together to solve compliance challenges with shared
suppliers.

Should this bill become law, companies may refuse to confirm that they share a supplier with a
competitor to avoid legal liability. This could prove a set back to some US brands that see shared
social assessments as a means to reduce audit fatigue and create a more united front from buyers.

Silence on the controversial Bill

While potentially a controversial bill, there is a peculiar lack of national dialogue surrounding it.
The proposed Act is companion legislation to a Senate bill that was first introduced in June 2006,
but quietly later died.

In January 2007, Senator Byron then re-introduced the bill, which he helped draft with the
National Labour Committee, an activist group that targets brands and retailers through high-
profile media exposés in an effort to drive improvements in labour conditions overseas.

Media and trade groups have been largely silent on the bill and its potential implications.

Congressional hearings held in February 2007 brought the standard clash of views regarding the
effects of globalisation but even that received little media coverage aside from local
Congressional news sites.

While the bill provides a way for the government to investigate worker complaints, only
competitors and investors have the so-called “private right to action,” which allows them to sue
when violations of core labour standards occur.

Workers, unions, and non-governmental organizations do not have this right under the bill.
James English, testifying for the United Steelworkers Union, asked Congress to revise the bill to
provide workers and their unions the right to sue.

The House and Senate companion bills still have a long road ahead. The majority of bills never
make it out of committee. Even so, the sponsors of the bill may need to further examine the
implications that the private right to action has for these burgeoning industry efforts to drive
sustainable improvements in global supply chains.

BOX What’s a sweatshop?

“Sweatshop” conditions are those in violation of “core labour standards.” Interestingly, the
definition in the bill omits “elimination of discrimination,” which is one of four core labour
standards defined by the International Labour Organisation (ILO). Instead, the bill considers the
following to constitute core labour standards: (1) the right of association; (2) the right to organize
and bargain collectively; (3) a prohibition on the use of any form of forced or compulsory labour;
(4) a minimum age for the employment of children; and (5) acceptable conditions of work with
respect to minimum wages, hours of work, and occupational safety and health.