1. The Struggle for Decent Work in the Global Apparel Value Chain-A Case Study Trade Union strategies for workers´ rights in the global supply chains of multinational companies. Turín 21st September 2015

2. Aims of Session Understand the value chain in apparel Consider the importance of mapping value chain actors in developing trade union strategies for delivering Decent Work. Develop a trade union approach to ‘economic and social upgrading’ Critically examine the 4 pillars of Decent Work in the apparel sector

3. THE APPAREL VALUE CHAIN

7. Types of Value Chain Buyer driven - Global retailers, global brands wield commercial power in industries such as toys, clothing, agricultural and consumer goods. Producer driven - automobiles, aeronautical Internet driven - E-commerce

9. ‘Buyer-Drivenness’ in Apparel - Some examples Race to the bottom in search of lowest labour cost Cutting and running Changing terms of contract midway through Extending payment schedules Demanding discounts Super-exploitation of labour at arms length

11. SO WHERE DOES THE VALUE ADDED GO?

12. The Global Production and Value Chain in Apparel Raw materials Processing Component Networks Assembly Export Networks Retail Networks Logistics After G. Gereffi 2001

13. Example : Jacket made in Zongshan Province China Fabric/component cost: $37.60 Other costs $ 1.48 labour cost $13.92 Overhead$ 7.52 Profit $ 4.24 FOB (ex factory price) = $64.76 Retail Price$400

14. Relation of Labour cost to retail costs $13.92 3.48% of retail cost But.. 65% of factory costs

15. VALUE CHAIN LOGIC FOR FACTORIES, SECTORS AND COUNTRIES

16. The Value Chain Logic of Economic Upgrading Raw materials Processing Component Networks Assembly Export Networks Retail Networks Logistics After G. Gereffi 2001 Backward linkageForward Linkage

17. Economic Upgrading product upgrading: introduction of a more advanced type of product/service process upgrading: changes introduced in the production process/service delivery with the objective of making it more efficient and productive functional upgrading: a change in the mix of activities performed by a firm or a locality towards higher value added tasks, e.g., inclusion of finishing, packaging, logistics and transport chain upgrading: a move towards a more technologically advanced production chain.

18. BUT DOES ECONOMIC UPGRADING LEAD TO SOCIAL UPGRADING?

19. Assessing the 4 Pillars of decent work in apparel Job security Rights at work Social Protection Social Dialogue

20. Pillar 1: Job Security Gains? Movement from primary to secondary sector In some countries increased employment for young women Many are economic migrants Winners and Losers?

21. Social Upgrading in Apparel Exporting Countries

22. WHAT ABOUT AT MICRO LEVEL? TASK A

23. Pillar 2 - Rights at Work Normally would be ensured by national labour inspectorate and trade unions and collective bargaining In apparel – anti union employers and in some countries under-developed labour administration systems is carried out by private social audit firms or multi- stakeholder initiatives on behalf of buyers Buyers need to show that they are upholding their codes of conduct

24. To rationalise and professionalise the activity the ILO has taken on board monitoring and capacity building Haiti, Bangladesh, Cambodia, Lesotho, Vietnam, Indonesia,Nicaragua,Bangladesh, Jordan.

25. Rights at work Enterprises YES NO With fake records 42 % 58 % Not paying wages 19 % Delaying payment of wages 6 % Underpaying wages 58 % With starting wage below minimum wage 23 % 77% With difficulty in paying minimum wage 33 % 33 % With difficulty in paying overtime 68 % 32% Providing social insurance to all workers 23% 77% Providing individual labour contracts 45% Source: Auditing on wage issues, FLA 2008. in Daniel Vaughan Whitehead, 2009 Incorporating Fair Wages into CSR Paper prepared for the FLA conference on Wages along the Supply Chain, Washington, 26 October 2009.

26. Rights at Work: a Living Wage No ILO Convention but Preamble to the ILO Constitution 1919 makes reference to an adequate living wage Most brands and retailers have a code statement to – a wage which covers basic needs plus an element of discretionary income In the absence of collective bargaining in the sector reliance on minimum wage setting In most cases the minimum wage is not a living wage

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28. Buyer C Buyer D Buyer B Buyer E Buyer A Fob Supplier Fob Current Model TUs Minimum Wage Employers Association Govt Factory FOB= price paid to factory per garment piece

29. Living Wage Issues Anti-Trust obstacle Retail Price escalation if there is a labour cost increase No agreement on a living wage benchmark How is it implemented in the absence of collective bargaining? Buyers want to see factories improve efficiency as a way to find more money

30. The Problem of which Benchmark – A Wage Ladder

31. SO CAN ECONOMIC (PROCESS) UPGRADING LEAD TO SOCIAL UPGRADING? TASK B

32. Pillar 3: Social Protection Case Study: Industrial Injury Compensation

33. 2013 Rana Plaza Bangladesh : A Game Changer

34. Health and Safety in the Bangladesh RMG post Spectrum 2005 Spectrum Sweaters & Shahriyar Garments, Savar, Dhaka 62/80 2006KTS Textile Industries54/60 2006Phoenix Garments22/50 2006Imam Group/57 2010Garib & Garib21/6 2010Tung Hi Knit and Sweater/20 2011Hameem Group28/40+ 2012Tazreen115/200 2013Rana Plaza1130/2,500 2013Smart Fashions7/10

36. Rana Plaza Arrangement – ILO facilitation IndustriALL and brands in presence of Clean Clothes Campaign and Worker Rights Consortium Established a fund (temporary) Claims Processing Entity Oversight Committee

37. Compensation: the Rana Plaza Arrangement US$30 million needed in the Arrangement Trust fund to ensure payments can be made. The claims process has begun. June 2015 – 2 years later finally met – entirely voluntarily Rana Plaza was a game changer…..

38. SOCIAL DIALOGUE - A SEA CHANGE?

39. A five year legally binding agreement An independent inspection program Public disclosure of all factories, inspection reports and corrective action plans (CAP) A commitment by signatory brands (200+) to ensure funding for remediation and to maintain sourcing relationships Democratically elected health and safety committees in all factories to identify and act on health and safety risks Worker empowerment through an extensive training program, complaints mechanism and right to refuse unsafe work.

40. Indonesia Freedom of Association Protocol for the Sportswear Supply Industry 20112

41. Sectoral Agreement in Jordan 2013 ‘For a first contract, it is quite comprehensive with provisions on union recognition and access to workers, dues check-off, dormitory standards, dispute settlement, employer rights, and annual seniority bonuses for all workers regardless of their nationalities’

42. Action Collaboration and Transformation ACT 2015 14 garment brands and retailers have set up a platform under the Action Collaboration Transformation (ACT) MOU with IndustriALL. Target countries – Cambodia, Bangladesh, Ethopia – Myanmar. to improve wages in the industry ‘by establishing industry collective bargaining in key garment and textile sourcing countries, supported by world class manufacturing standards and responsible purchasing practices’

43. Sectoral Agreement from Corporate Social Responsibility to Joint Responsibility National TUs Manufacturers’ Associations Buyers Global Unions

44. THANKS FOR YOUR ATTENTION