Fair Trade for the Global Garment Industry

http://www.nytimes.com/2015/05/21/opinion/fair-trade-for-the-global-garment-industry.html

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PHNOM PENH — The collapse of the Rana Plaza factory in Bangladesh two years ago may have horrified consumers in the West, but the working conditions it exposed hardly are an anomaly in the global garment industry. Low wages, long hours, unsafe buildings and inadequate regulations are the norm. Even as the industry’s profits grew worldwide, in countries like Bangladesh, Honduras, Mexico and Cambodia real wages for garment workers declined from 2001 to 2011.

The industry is dominated by the same Western labels selling in the same Western markets. These brands deliberately source their products from factories in poor countries with inadequate labor laws and weak health and safety regulations; it’s cheaper that way.

In fact, the big brands reap billions of dollars chasing the lowest production costs they can find, moving from one country to another when those costs rise too much. This creates a perpetual race to the bottom, in which workers’ rights are squeezed by the factories that employ them and by the governments that supposedly oversee those factories.

Major brands sometimes claim they want to improve local working conditions but cannot. This is disingenuous. While it is true that they do not own, or even manage, the factories they source from and that they do not write the laws of sourcing countries, they have tremendous leverage over both.

Take Cambodia. Its economy is dominated by the garment industry, which accounts for at least 80 percent of the country’s total exports — some $6 billion a year, according to government estimates, generated by about 600 factories that hire mostly women, generally young and uneducated. H&M, Gap, C&A, Marks & Spencer and Walmart lead production, selling mostly to consumers in the United States and the European Union under structured trade preferences favoring imports from developing countries.

Cambodia is sometimes touted as a model for the global industry, partly because it was the first major garment producer to be monitored by the International Labor Organization. Over the past two years, however, workers there have struggled, sometimes at great risk to themselves, to obtain fair wages and decent working conditions.

In 2013 the minimum wage in Cambodia was about $80 per month, even though a government commission had determined that a “living wage” in the garment sector should be about $157-$177. In late December that year, the government, still ignoring its own findings, announced that as of April 2014 the new minimum wage would be $95 (and would gradually be increased to $160 by 2018). Within days it raised the figure to $100, but garment workers, led by independent trade unions, had already gone on strike. They shut down all factories for a week.

The response was swift. On January 3, 2014, state security forces shot into a crowd of striking workers in an industrial zone on the outskirts of Phnom Penh, killing five people and injuring more than 30. Prominent union leaders and workers were charged, imprisoned and convicted for incitement to violence and property damage. The right to form new unions and to assemble was in effect suspended for much of 2014.

The Cambodian government, acting under intense pressure from unions, has since increased the minimum wage to $128 per month — still well below what it has said is a living wage. There has yet to be an investigation into the shootings, and the leaders of the major independent unions who backed the strikes are being sued in lawsuits sponsored by the garment industry. A widely decried trade union law that would further limit the rights of Cambodian workers is likely to be passed soon. So much for the industry’s model.

But this story also suggests how conditions can improve, and what role the big brands can play.

After years of reaching double digits, annual growth in Cambodia’s garment industry contracted sharply in 2014: Following the brutal crackdown in January that year, international orders for locally produced apparel dropped, partly because of all the bad press and new uncertainty about whether the industry could operate smoothly again. At the same time, however, some major brands — like Adidas, Nike, Levis, Gap, Disney and Walmart — condemned the government repression and called for the establishment of a formal mechanism to ensure that workers would get a fair wage. Then, after months of media reports and campaigning by unions and nongovernmental organizations, H&M and Zara, among other brands, announced that they would adjust their pricing practices to help local factories defray the costs of having to pay workers better.

Of course, the brands’ main rationale remains protecting their bottom line — which also means that threatening their profits is one means of persuading them to call for improving workers’ conditions. Here is another example: The Accord on Fire and Building Safety in Bangladesh, a binding agreement developed in the wake of the Rana Plaza accident. It came about partly thanks to the support of major international brands, which were responding to outrage from the media, unions and consumers.

Independent trade unions can help pressure global brands. To counteract the brands’ habit of playing one producing country off another, local unions could coordinate with international union groups to demand that working standards be harmonized across the global production chain. Likewise, governments from sourcing countries should act together: Rather than be driven by the fear of losing out to one another, they should form a bloc and insist that the big brands set uniform standards for wages, union rights and workplace safety.

Western governments have tremendous leverage, too, especially those, like the United States and European Union states, that provide trade preferences to certain supplier countries. They should condition any such trade privileges on the implementation of better protections for workers in sourcing countries.

And then there are the consumers. End-product buyers could require the brands to be transparent about their sourcing, and ask them to identify not only the countries, but also the specific factories from which the brands supply themselves. Consumers could also commit to purchasing only, or paying more for, products manufactured by workers who are earning a living wage.

Given the global nature of the garment industry, and of its shortcomings, improving workers’ lot calls for a global solution. The most efficient approach is to increase the costs to the big brands themselves of tolerating poor working conditions. This is also the fairest approach. As the main drivers and the main beneficiaries of the global garment industry, the big brands are ultimately responsible for the basic welfare of all the workers who toil for their bottom line.