Presentation of “best” “worst” practices – (Part II) Upgrading/downgrading GSC Mark Anner Associate Professor of Labor and Employment Relations Director, Center for Global Workers’ Rights Penn State University

Overview Dominant Practices: Monitoring the bottom of GSCs. New Approach: Monitoring pricing and sourcing dynamics of lead firms in GSCs. New Strategy: Triangular Bargaining.

UNDERSTANDING SUPPLY CHAIN DYNAMICS

Monopsony Power Retailer Consolidation; thousands of supplies competing for contracts with a few large retailers

60-80% Women Workers 16%-23% of value 77%-84% of value Apparel Supply Chain

Four Impacts of MNC Pricing Dynamics 1. Pressure to keep production costs low (wages, benefits, building rents, etc.). 2. Work intensity through the piece rate system. 3. Union avoidance; worker rights violations. 4. Accumulation of income at the top.

Running Shoes, Global Supply Chain, Who Gets What?

Production Cost, Jeans US Retail Price: USD $29 to retailer, 77%

20 Top Exporting Countries to US 40% MNCs savings; 7.5% consumer savings. Source: Anner, Bair, Blasi, 2013: “Toward Joint Liability in Global Supply Chains

Prices and Workers’ Rights Source: Anner, Bair, Blasi, 2013: “Toward Joint Liability in Global Supply Chains

Sourcing Dynamics Source: Anner, Bair, Blasi, 2013: “Toward Joint Liability in Global Supply Chains

Impacts of MNC Sourcing Dynamics 1. Excessive and forced overtime. 2. Sub-contracting and homework. 3. Rise in health & safety issues.

Best and Worst Practices: Limits of CSR

CSR Corporate Social Responsibility Programs. Once considered “non-state mechanisms” for addressing labor/social issues in supply chains. Example: The FLA. Now, include mechanisms that include non-state actors and non-state institutions. Example: Better Work.

How CSR Programs Work Rely on non-state funding; often lead firm funding dominates. Establish a code of conduct (often referencing the eight core ILO Conventions). Use non-state inspectorate; “compliance officers” “monitors” “social auditors” Inspect factories, write reports, recommend changes.

Limits of CSR Do not have the power and the legitimacy of the state. Cannot impose fines on violators. Most important limitation: ◦ Inspecting the bottom of the supply chain, when most of the problems begin at the top. Why? ◦ Because the big firms at the top of the supply chains are helping to fund these programs.

Research Findings: FLA The Remediation Challenge Can’t impose fines for violations. Reluctant to cut contracts. Results: lots of policies, training, committees Source: Anner, 2012, “Corporate Social Responsibility and Freedom of Association Rights

Research Findings, FLA (cont.) Freedom of Association failure of CSR 18 Source: Anner, 2012, “Corporate Social Responsibility and Freedom of Association Rights

Research Finding: Better Work Problems such as overtime and FoA rights persist. Attempt to address the problem by establishing worker-management committees have limitations. In only 11.2% of factories did workers always speak up meetings and in only 18.9% of the factories did workers feel safe from retaliation.

16%-23% of value 77%-84% of value Apparel Supply Chain

Towards an Alternative Vision for Addressing Sweatshop Practices in GSCs? Towards an Alternative Vision for Addressing Sweatshop Practices in GSCs?

Triangular Bargaining Pressurizing lead firms to stabilize sourcing practices and increase prices to achieve sustainable improvements for workers at the the bottom of supply chains. Through triangular bargaining: workers/unions, factories, lead firms. With the backing of a supportive state institutions.

Examples? Jobbers Agreements in the US (1930s- 1960s). Bangladesh Accord? IndustriALL initiative in Cambodia? Main lesson? Need to get the lead firms to the bargaining table. Need good laws, strong enforcement, effective union strategy/preparation.

THANK YOU