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Op-Ed: Free Labor is a Far Greater Problem for Apparel Brands Than Forced

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A recent report looked at the major ethical challenges faced by apparel buyers in their sourcing, and concluded the top challenge was forced labor. But is it?

Voluntary labor causes buyers—and shoppers—far more headaches.

Forced labor: lots of new laws-but little public excitement

The report correctly observed that laws against forced labor are growing.

America’s Trade Facilitation and Trade Enforcement Act, signed into law in February, included provisions against importing convict-manufactured products, allowing U.S. Customs to issue a seizure order in March of rayon from China’s Tangshan Sanyou Group.

That Act attracted little controversy.

In February there was scarcely any public reaction when a factory owner was the first to be jailed under Britain’s Modern Slavery Act. He’d forced up to 42 men into two bedrooms and paid them virtually nothing in a racket making bedding for major UK retailers, two of them with highly-rated ethical sourcing policies.

Contrast this with the fury over the “exploitation” hundreds of UK newspaper readers insisted was how Germany’s Lidl could sell Bangladesh-made jeggings at 5.99 pounds ($8.45) a pair. The row reprised anger a year earlier when a T-shirt used to promote feminism turned out to have been made by Mauritian workers earning 62 pence ($0.87) an hour. In both cases, every single worker involved was working voluntarily, with no evidence of illegality or worker abuse.

Why the different reactions?

Capitalist Lidl and campaigning feminists alike attracted deep resentment for selling—like all other retailers—garments made by workers receiving wages many thought exploitative. What’s more, many others in the West see those low wages as threats to their own interests. And with most people in developing countries earning far less than garment workers, if they can get a job at all, few agree what should be done about it.

Forced labor doesn’t dominate apparel manufacture like free labor does

Forced labor is certainly an issue in some apparel supply chains.

  • Adults are sometimes forced, under duress, to work in cotton fields—for instance in Uzbekistan and other Central Asian countries and in in parts of Syria and Iraq recently occupied by ISIS.
  • There are cases of child labor in Asian garment factories, though almost entirely making garments that do not reach foreign customers
  • Brokers are known to have trafficked migrants into virtual slavery in garment factories: from Bolivia into Argentinian and from Vietnam into Russia, for example.

But these examples affect a tiny proportion of the 100 million people in poor countries relying on the apparel and textile industries for a living. Syria, for example, accounts for just half of 1 percent of the world’s cotton production, and there’s been scarcely a single documented example of child or forced labour being used to make clothes sold in the U.S. or Europe in the past decade.

Practically every single garment on sale in the West, though, has been made by someone earning less than $400 a month ($2.50 an hour), often as little as a quarter of that. The average U.S. worker earns $3,575 a month.

Every one of those low-paid workers is voluntary—and better off than most of her neighbors.

Forced labor is much easier to control than poor or abused free labor

There was no significant objection from our industry to recent laws requiring greater transparency about the use of forced labor in California and the UK—or to the anti-forced labour clauses in America’s Trade Facilitation and Trade Enforcement Act. Over 200 buying companies have signed the Cotton Pledge to eliminate Uzbek cotton from their garments.

Activists do pitch for tighter rules, tougher enforcement, or tighter definition of forced labor. A January 2016 attack on multinational companies by the International Trades Union Confederation (ITUC) tried to slap the term “forced labor” onto controversial practices like compulsory overtime, poor safety or short-hours contracts. But international law’s clear on its definition of forced labor—and it doesn’t include ITUC’s list.

Like low wages, almost all labor abuse occurs among workers unaffected by recent laws against forced labor. Those problems raise far more complicated issues than a few laws can solve.

Why poor labor is tough to legislate away

Taking low wages as an example:

  • The ITUC believes “The cash holdings of 25 [major] companies…could increase the wages” in their suppliers’ developing-world factories “by more than $5,000 for a year.”
  • Many Western politicians simply want to ban the products of cheap labor, which is why free trade initiatives like the Trans-Pacific Partnership (TPP) are struggling to get approval in Western countries.
  • Some activists think the solution is to buy less. Maya Spaull, director of new category innovation at Fair Trade USA says, “We need to help think about buying fewer things, that are better things.”
  • Others claim there’s a “race to the bottom.” Spaull has also claimed, “When more regulations are imposed on one country, another country will open its doors for the business at an even lower cost.”
  • In March The World Bank singled out South Asia’s apparel industry for its “immense potential” to create the jobs it sees as essential in a region where a million new people a month hit working age—and scarcely any find work. South Asian governments broadly agree: they want those new jobs.
  • H&M believes its pilot Fair Wage Method will move 850,000 workers at its strategic suppliers to earning living wages by 2018.

All these groups sincerely want poor workers to be better off. But their proposals point in conflicting directions.

Western activists vs. developing-world governments—the key debate

People in poor countries put up with poor working conditions because there aren’t any other jobs. Buying “fewer things” doesn’t mean “better things,” it just means poorer workers. No-one has yet developed an alternative to the garment and textile industry as a creator of the jobs poor countries need to pull their people out of poverty.

And the idea of a “race to the bottom” flies in the face of the real world.

In 2015, U.S. importers paid $2.88 per square meter for garments from Bangladesh. From China, where workers earn at least three times what they’d get in Bangladesh, they paid $2.68, and bought six times as many garments.

For Bangladesh, the competitor isn’t a country that’s recently opened up like Myanmar, where wages are lower, prices are higher and U.S. importers bought less than one-hundredth the number of clothes they bought in Bangladesh.

It’s China. Because in Bangladesh, as in almost all other developing countries, just about every garment making cost except wages is substantially higher than in China. The real problem is what has to be paid in Bangladesh for the country’s inefficient or corrupt public administration and infrastructure. Most of what a brand pays a Chinese factory goes to the workers.

So, without careful management, pay rises for garment workers in the poorest countries risk their jobs being moved to a country where productivity is higher—and that’s China, not Myanmar. What would then happen to the four million Bangladeshi garment workers?

What if the major buyers, as ITUC suggests, spent their reserves on boosting wages at suppliers by $400 a month? Protectionists would still be screaming “exploitation” and demanding trade barriers, of course.

But once the buyers spend their reserves, what happens the following year?

The central strategy to combat low pay and abusive conditions

The jobs our industry creates are essential to help pull the world’s poorest out of poverty.

The only answer is for Western brands to ignore the hysteria from the Western activist community, and use their clout and skills to help factories in the developing world provide commercially-sustainable, better-paying, jobs. This means continuing to increase their orders, though directing them to factories committed to improving their productivity and increasing their workers’ share of revenues.

There can be no one model for achieving this—and there’s no shortage of competing ideas. Some, like H&M’s Fair Wage Method, seem well established, with the number of factories in the program doubling this year. Others, like Tau Investment Management, see a role for venture capital, and many individual factories are trying to achieve the same goals themselves.

But it’s going to take years before most garment workers are properly paid, and most knee-jerk solutions proposed to speed the process up would simply increase the amount of human misery and won’t be adopted anyway.

Meanwhile, the problem of working conditions in developing countries will continue to be the central ethical problem in the apparel supply chain. Even though virtually all the workers putting up with them are there of their own free will, because they know their neighbors without those jobs are a lot worse off.

 

Mike Flanagan, CEO Clothesource. Clothesource offers consultancy on the world garment industry using the wide resources of The Clothesource Knowledge Base – the most comprehensive collection of information anywhere about sourcing for the apparel industry. He can be contacted at Flanagan@clothesource.net.

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