3 Better Factories What is it? Anyone heard of it? 5 mins brainstorm
4 Cambodia 13 million people 260 000 workers 80% of Cambodia’s exports 230 factories 70% owned by Chinese speakers 70% exports to US Per capita income is US$27 per month Average garment wage = US$72 per month Directly supporting 1 million people 30 – 50% salary sent home to family
5 Objective Increased firm level compliance with Cambodian and international labour law =better working conditions for workers =reduce poverty =win:win:win:win
6 Background 1999 US Cambodian Trade Agreement Quota access for compliance Possible 18% increase ILO executing agency to monitor and report Project January 2001 USDOL funding, GMAC, Govt Govt links export license to registration with the project
7 Discussion point Why do you think that the project was controversial when it started?
13 Monitoring 6 teams unannounced visits Agreed checklist over 500 items interviews management, workers and unions Falsification checking
14 Discussion point Contact with auditing firms? Do they talk with union leaders? Impressions?
15 Monitoring reports 15 synthesis reports Each factory given a report Buyers can request reports Monitoring plus Factories named independent, transparent and credible
16 Key aspects of the labour law Handout – see fact sheet about the industry Discussion point – how does this compare to factories in your country?
17 Key findings Handout 1 Discussion point – how does this compare to factories in your country?
18 Supplementary research Harassment Personal security Health and OSH Breastfeeding Dispute resolution
19 World Bank Survey of Buyers on Labour Standards #1 for deciding to source from a country Cambodia #1 compared to competitors 60% - labour standards equal or more important that price, quality and lead times 86% - moderate to critical importance to consumers in the future ILO monitoring highly credible See fact sheet
20 Post quota See fact sheet Still early days Buyers consolidating Price, quality, lead times and compliance
42 Industry Post MFA Strategy Market niche of good labour standards Reduce corruption Trade facilitation Improve business environment Improve quality and productivity Improve skill levels Increase Khmer management expertise Labour standards is not enough
43 Project strategy Refocusing to providing info to international buyers to inform sourcing decisions Increased emphasis on remediation Reducing duplication of monitoring Building business case Self sufficient national organization by 2009
47 Industry… What matters is: Price Quality Lead times Compliance with labour standards Innovation and whole service
48 Context Improving working conditions key to pro-poor development CSR and monitoring will grow Monitoring is not enough Must support freedom to organize and collectively bargain
49 Buyers Engagement of buyers is critical Not all buyers are the same Important leverage point Quality of buyer audits and engagement varies Risks involved
50 Progam design Independent, credible and transparent Strong government and buyer support Use local staff Mainstream social dialogue Incentives and enforcement National or geographical approach Tri-partite approach Reduce duplication of monitoring Engage with buyers and other stakeholders Emphasis on training and improvement Consider language
51 Challenges Claiming too much Monitor up to the factory gate Corruption Good governance and rule of law Lack of tolerance of opposition Freedom of press Union corruption and division