Private regulation of labor practices in global supply chains is—on the whole—not working.
That was the topline from data analyses we’ve shared in earlier Sourcing Journal columns. However, the situation with regard to freedom of association (FOA) and collective bargaining (CB) is puzzling. On the one hand, data from unions and case study evidence suggest that workers in fashion’s supply chains are rarely represented by unions, and are generally not covered by collective bargaining agreements. On the other hand, data from social auditing shows that the number of violations of the right to freedom of association is generally very low, suggesting that these rights are rarely violated. What might explain this disconnect?
One theory is that social audits are generally unable to detect whether factory management is actively thwarting the attempts of workers to establish labor unions for collective bargaining purposes. Audits are typically of a very short duration. Just two days, typically, for a large factory and auditors may interview selected workers for an hour inside the factory where workers are under watchful management eyes and potentially could have been coached to provide the desired responses. Auditors rarely visit workers at their homes where they maybe more forthcoming about the real situation in the factory.
New research from our Cornell New Conversations Project (NCP) suggests an alternative explanation, as well.
NCP researchers argue that supplier factories engage in symbolic compliance by adopting the required structures, such as labor unions and collective bargaining, but do not practice substantive compliance in their day-to-day operations, undercutting the ability of workers to exercise these rights. This explains why relatively few violations of freedom of association and collective bargaining are found, but also explains why good faith bargaining between organized workers and their employers is quite scarce in apparel factories. Suppliers and their buyers are a matched pair in this way. Brands and retailers tout their commitments to freedom of association but in apparel’s top three producing countries, worker organizing is either illegal—China and Vietnam—or enormously difficult as in Bangladesh.
The argument is supported by a detailed statistical analysis of violations data from three prominent multi-stakeholder initiatives (MSIs). These are Better Work (a program of the ILO), the Fair Wear Foundation which has many small- and medium-sized European brands as members, and the Fair Labor Association which has many large global brands as part of its membership. All three MSIs provide detailed information from audits regarding the different ways in which freedom of association and collective bargaining have been violated. For example, around 64 percent of Better Work factories have unions and 4 percent appear to be represented by a collective bargaining agreement. These are remarkably high rates for apparel factories. In these factories, findings of egregious violations of organizing and bargaining rights (such as firing union activists) were rare.
On the other hand, there were substantive day-to-day violations of other organizing and collective bargaining rights, in ways that prevent workers from exercising their voice, even where there was a union or an agreement at their workplace. These include workers not being informed about the collective bargaining agreement, management not implementing the terms of the agreement, management interference with union and worker elections to union, safety and health committees, discriminating against union activists, not bargaining in good faith, failure to attend social dialogue meetings, no written record of labor-management meetings, the union not provided an office and time off from work for union business, and violations of the right to strike.
In sum, the picture from all three sources of data indicates some amount of symbolic compliance with required freedom of association and collective bargaining structures such as unions and collective bargaining, but substantive non-compliance in ways that undercut the ability of workers to exercise their voice. In other words, there is compliance with the letter of the law but not the spirit.
Most importantly, statistical analysis of the violations data show that, first, when substantive non-compliance with freedom of association and collective bargaining requirements is high, violations of all labor issues are also high. And substantive non-compliance significantly reduces the effect of unions and CBAs on overall compliance. The fact that we find these results in the more “progressive” MSIs is a cause for concern. If there is symbolic compliance and substantive non-compliance in these progressive MSIs, substantive non-compliance is likely to be much worse in other MSIs and in supply chains more generally.
Three important implications for global buyers here are clear. First, their obligation to ensure that suppliers have substantively complied with the freedom of association and collective bargaining codes of conduct in everyday operations is not met. Instead, fashion’s brands and retailers, in the aggregate, are tolerating the mere adoption of the structures required to pass the audit and keep orders flowing.
So what should they do?
Buyers—and the governments with which they are working—must make workers aware of their freedom of association and collective bargaining rights, as a critical first step. And arguably more important, buyers must help create space for workers to exercise these rights. This means sending clear signals to suppliers that workers’ organizing and bargaining rights are core sourcing criteria. But how many sourcing strategies include a filter for, or assign significant value to, independent unions and meaningful collective bargaining? Very, very few. Without this, there will be no change and violations of core labor standards will continue.
Second, buyers that ignore or fail to detect these violations are leaving money on the table. Our analysis of data from Better Work shows that compliance is highest in supplier factories when there is both an active union and a proper collective bargaining agreement in place. Compliance was lower when only one of these institutions were present and lowest when neither was present.
A third implication for buyers is higher regulatory risk. The regulators in the European Union who are developing the rules to accompany the recent mandatory due diligence legislation will be pressed to make rules that go beyond symbolic compliance to include substantive non-compliance as well.
We share new analyses and discuss these issues in depth at the New Conversations Project Conference in New York City on June 16. Click here to see the agenda and register.