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Dr Anita Chan
An anti-sweatshop movement in America and Europe has obliged a large number of well-known Western corporations to change their practices. Over the past decade, the movement has targeted corporations for allowing sub-standard labour conditions in the factories that produce their brand-name merchandise. Underlying this campaign is the notion that corporations should be held to socially responsible standards.
The anti-sweatshop movement consists of a loose broad coalition of grassroots non-government organisations (NGOs), student groups, church groups, environmental groups, labour organisations, consumer groups and community groups. The movement has taken the moral high ground - a strategy that, over time, has paid off. After initially ignoring the movement, today a large number of transnational corporations (TNCs) openly accept (and themselves publicise) the idea that they hold a responsibility to upgrade labour standards in the factories that produce merchandise bearing their names. Many of these TNCs, including Nike, Gap, Reebok and hundreds of other big brand-name corporations, have hired a corps of staff to handle labour rights and human rights issues.
In industries such as footwear, garments, electrical and electronic appliances and toys, very few of these Western TNCs operate their own factories in Asian developing countries. Instead, they contract out production to Asian manufacturing firms – Indonesian, Thai, Taiwanese, Hong Kong and Korean companies that have themselves sometimes become very large. An excellent example is Pou Chen, a Taiwanese-owned firm that manufactures for all of the famous brand-name athletic footwear companies of the developed world and employs some 280,000 people, mostly in low-wage Asian countries. Alongside such giants are many thousands of small and medium-sized suppliers. Most of China’s exports of brand-name merchandise are produced by Taiwanese, Hong Kong and Korean manufacturing companies that moved off-shore into the PRC when labour costs increased at home. Starting in the mid-1990s, in response to the anti-sweatshop movement’s pressures, Western TNCs initiated a flurry of activities to check on labour conditions at the companies producing for them in Asia. This included employing their own full-time monitors in factories, auditing, and verification visits by staff from their labour rights and human rights departments. A flourishing new business emerged with firms of consultants getting involved in monitoring and auditing.
Thus far, the impact has been restricted principally to large factories. Monitoring all of the thousands of small subcontractors and sub-subcontractors has proved to be expensive and unfeasible. Even at larger factories, there is evidence that the efforts of some of the new monitoring and auditing companies have sometimes been perfunctory exercises, occasionally with the tacit approval of the Western TNCs that employ them.
Some of the Asian manufacturing firms continue to employ child labour, some force their workers to labour for 70 hour weeks, some violate the local country’s minimum wage laws, and some forego the most elementary and essential occupational health and safety (OHS) safeguards. To fool conscientious auditing companies, some of the factories have developed new software programs to falsify records and issue wage slips that are impossible to decipher. Others engage in elaborate stratagems like secretly moving part of the production to a newly established factory, after being caught violating the client company’s code of labour standards.
Nonetheless, especially at many of the larger factories, the anti-sweatshop movement’s influence has had a noticeable effect. Conditions on the shopfloor and in dormitories have improved and OHS standards are better met. But wages have remained low, frequently doctored to make it look as though they meet the local country’s minimum wage and work hour laws. A major reason is that the supplier factories, not the TNCs, foot the bill, and the suppliers feel squeezed.
WATCHPOINT: The anti-sweatshop movement is entering a new phase – urging the TNCs to share the costs of improvements in labour conditions.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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