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Regulation, Recognition & Relationships Can Move the Needle on Labor Rights

Social supply chain issues became highly visible during the pandemic, as vendors grappled with canceled orders and workers faced furloughs. Adding to the heightened focus on social compliance, reports of forced labor in China’s Xinjiang Uyghur Autonomous Region also gained attention.

Looking back further, it has been almost a decade since the Rana Plaza collapse drove a worker rights reckoning in fashion supply chains. Even with this labor protection pressure, Jason Judd, executive director of Cornell University New Conversations Project, explained during a Texworld New York City panel that overall, progress on compliance has stalled. “Labor violations go up and they go down, but on the whole over the last decade, there’s been precious little improvement,” he said.

The level of action on labor compliance has varied brand by brand because it is privately regulated by the companies themselves, Judd said. There are frontrunners who have set up programs with stringent reporting, those who are just “going through the motions,” and a third group with nothing in place. Showing the amount of inactivity, a Cornell study found that one-third of one major supplier’s buyers didn’t investigate labor rights.

What does prompt companies to take more concrete action on compliance is tragedy and trade disruptions, such as the import ban on Xinjiang cotton, Judd noted.

The brand-supplier relationship became strained during the pandemic as both parties struggled. Matthijs Crietee, secretary general of International Apparel Federation, compared the situation to two people jumping from a plane without parachutes, who are holding onto each other as they fall. From his perspective, both partners are victims of a “faulty system” of overproduction and discounting, in which brands focus on cutting costs and suppliers feel they have to accept terms. There is also a disconnect between a buyer’s CSR standards and the sourcing department’s “impossible delivery conditions.” By bringing supply more in line with demand, he sees the opportunity to free up and reallocate capital for improvements.

Another factor that could create change is committing to long-term relationships. As buyers chase faster lead times, they must be more digitally connected and collaborative with their suppliers, making them less replaceable. “If you’re stuck with a supplier because he’s integrated in your system, that provides…much better grounds for eventual improvements in working conditions,” said Crietee.

Brands can also be a driving force of change by setting standards and holding factories to them. Judd gave the example of a home goods brand that set five-year targets and agreed to stay with suppliers as they worked toward the goals. If they didn’t meet the standard by the end of the five years, they would end the relationship. This agreement improved factory compliance in the brand’s supply chain from 68 to 98 percent.

Much of the worker welfare discussion focuses on factory employees, but those who manufacturer via home-based work also need protection. Lucy Brill, director of Homeworkers Worldwide, explained that these workers are often women whose domestic responsibilities make it difficult to work on-site at a factory. “They haven’t got any other opportunities, and yet they desperately need this work to feed their families,” she said. “That makes it more difficult for them to challenge when things are wrong.” This could include intermediaries taking a bigger cut of their wages.

According to Brill, outlawing homework is not the answer, since it will drive this labor outside of the scope of audits and oversight. “It won’t necessarily lead to them not being there, but it will push them further underground and make it more difficult to bring about change,” said Brill. Instead, companies should acknowledge this workforce. She referenced her organization’s research on child labor that found when brands recognize homeworkers, children in these families sometimes experience better conditions than those of factory workers.

Homeworkers could benefit from organizing. Even though there have been some efforts to unionize, there are hurdles in bringing these individuals together since the workforce is spread out and may not recognize their rights as workers.

For factory workers, Cornell’s research found that a combination of unionization and collective bargaining improves labor compliance by about 10 percentage points. However, Judd said it can be challenging to organize a union, particularly in countries that don’t have freedom of association. The findings indicate a push instead toward sectoral grants, or bargaining that would involve suppliers.

Following Rana Plaza, brands and unions came together to create the binding Accord on Fire and Building Safety in Bangladesh. Crietee noted that while this has been able to assuage buyers’ concerns, factories were not involved in the original discussion. “In the transition from something that is led by buyers to something that is led by the industry in the country itself, this is not a smooth process,” he said. However, he said other associations are looking to emulate aspects of the accord.

All three panelists see the opportunity for more governmental regulation of labor. Already, the European Union has introduced legislation that would enforce corporate due diligence. Germany has passed a similar law that enables fines for companies found noncompliant, which is going into effect on a rolling basis by company size.

“If you think of private versus public as a pendulum swinging between the two, it’s definitely swinging back towards public,” said Judd.

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