Neil Kearney, general secretary of the International Textile, Garment and Leather Workers’ Federation, has little time for CSR consultants and thinks NGOs have got the wrong end of the ethical sourcing stick

A full-time trade unionist in the garments industry since 1972, Neil Kearney was winning awards for his work on eliminating child labour back in 1998, when many companies were still in the dark about the issue. Kearney has a manner so dry his humour is hard to detect, but it lies under the surface and is brought to light quickly. It would probably be impossible to do what he does – campaign for better labour standards and worker representation in the world’s poorest nations – without some sense of perspective.

Claims of child labour in Gap’s supply chains offer a sobering lesson for supporters of company-led “ethical sourcing”, says Kearney. He asks: “If after a dozen years of frantic activity … the lead player has not rid its supply chain of children, what does this say about CSR’s ability to drive change?”

He acknowledges the progress of some companies in this area, noting that a dozen years ago only a handful of firms had ethical codes, while now there are thousands. New corporate players are beginning to grapple with trying to see their ethical supply codes adhered to, he says, but some giant retailers are “tempting the market with lighter, watered down” ethics codes for the supply chain.

Last year, the Ethical Trading Initiative (ETI), a group of UK companies trying to improve supply chain labour conditions, reviewed what progress it had made since it began in 1998. The group found that business standards had driven improvements on eliminating child labour, health and safety, and minimum wage requirements. But despite all the business activity on ethical supply chains, there had been little progress on the notion of a living wage, Kearney says.

Kearney suggests that “real wages” in many sourcing countries “have fallen by up to 25 per cent since 1995”. Nowadays, he says, a 60-hour working week is seen to be acceptable, while back in 1919 the International Labour Organisation said 48 hours should be the limit. The notion of the “living wage” in countries such as Bangladesh is a huge bone of contention among companies, campaigners and unions. In December 2006 ethically minded retailer Levi Strauss was suspended from the ETI for a year in a row over the notion of the living wage. At the time, Levi said the concept of a living wage was not properly defined, and too “aspirational” for the company to include in its ethical code.

Wages are becoming a big issue in places such as Bangladesh, says Kearney. The minimum wage was worth $33 a month in 1995, but by 2006 it was worth only about $13. He says it should be about $43, enough to “get by” on. The government has now set a minimum of about half that, some $22, he says. So the legal minimum is only half a living wage.

NGOs an obstacle

But paying better wages does not have to cost the consumer more. Kearney points out that the labour content is only about 8 per cent of the cost of the garment. In a garment that takes 12 minutes to manufacture, the difference between the minimum wage and a living wage would add three US cents to the price, he claims, while having a dramatic impact on living standards in Bangladesh.

Kearney feels that non-governmental organisations targeting western brands in campaigning for higher labour standards in developing countries are becoming an obstacle to achieving goals such as a living wage. His view hints at a growing gulf between international labour unions and international NGOs. Some are using what he calls “parallel means” to keep workers out of unions.

Organisations such as the Fair Wear Foundation promote worker committees over unions, says Kearney, and this goes against what the ILO recommends. NGOs also made a critical error in the mid-1990s, says Kearney. They pushed responsibility for contract factory working conditions onto brands, which are not equipped to deal with the problem. This, says Kearney, has led to the lack of progress in the field, when encouraging union membership and representation would have been much more effective.

He disagrees, for example, with the approach of the Workers Rights Consortium, a US pressure group on labour standards, which, he says, claims the problems in the supply chain are all the fault of the buyers for big brands. “That’s flawed. It bypasses the employment relationship,” he says.

Over the next year or so Kearney expects more debate on this point. He cites academic studies on the difference between codes of conduct and international framework agreements, whose findings show that codes of conduct can have a negative impact on industrial relations.

Zara deal

Kearney’s union, the International Textile, Garment and Leather Workers’ Federation, recently signed the first global framework agreement to cover a supply chain, with the owner of the Zara fashion retail outlets, Inditex. The Spanish retail group is one of the largest retailers of garments in the world. Under the agreement, Inditex “recognises ITGLWF as its global trade union counterpart for workers engaged in the production of textile, garments and footwear”.

Both the union and the company have, says Kearney, committed to work for a “mature commitment to industrial relations … in the supply chain” using engaged, genuine union relations and collaboration. Inditex and the ITGLWF have worked together to rewrite the company’s code of conduct and reinstate more than 1,000 workers fired by suppliers for engaging in trade union activity.

The catalyst for the deal was the same factory collapse in Bangladesh that KarstadtQuelle was also accidentally involved in. Inditex was unknowingly sourcing garments from the factory. These sorts of deals with firms such as Inditex are the future of codes after “mark one”, Kearney argues. “This is the future of corporate social accountability.”

As part of the deal, Inditex agreed to uphold worldwide respect for freedom of association and collective bargaining among its workers and in its supply chain.

Kearney says the ITGLWF is also working with Gap, briefing corporate social responsibility staff on trade union issues. The union also works with UK retailer Next to raise awareness of freedom of association issues among buyers, and is working with Arcadia on the “Join” code of conduct, a pilot project on labour standards in Turkey, from which Arcadia has adopted a code of conduct. “They seem to be very serious,” Kearney says, but “implementation will be another matter”.

Monitoring confusion

Despite progress being made, Kearney thinks most brands are confused about how to ensure their supply chains are ethical. They confuse auditing supplier factories, which only generates a snapshot of the scene inside, with monitoring on a continuous basis. And monitoring is not something buyers for companies are equipped to do, he says. There needs to be a permanent watchful eye in workplaces to prevent ethics breaches. His view is that corporate social responsibility has failed workers in the supply chain, but that this is not the fault of the brands engaging in it. It is rather, he suggests, that the problems are so great that companies are just not equipped to tackle them. Instead, he says, continuous monitoring can only be achieved by union membership in the workforce and mature industrial relations between employees and management in factories.

The business “CSR cops”, as Kearney calls in-house ethical audit teams, are simply “not very well equipped”, though they are more effective than consultants to companies who conduct many of the audits in the supply chain.

Monitoring has also encouraged the huge rise in the number of labour standards consultants, who are a “wart on the face of CSR” and are “poorly motivated and trained”, producing often glowing reports on companies.

“Codes are a useful verification tool,” says Kearney, but now the ethical supply chain movement needs to prepare for life after codes. This means managing the issues should be returned to the workplace “through mature industrial relations”. Management and workers, Kearney points out, are in the workplace, “hour by hour, minute by minute”.

Democratically elected worker representatives need to sit with management and work out problems in factories that are contracted to big brands, he says. Freedom of association and collective bargaining are the only way forward, he says, noting that the board of the ETI has reached exactly this conclusion and has put progress on union membership at the top of its agenda. Brands and retailers could fade out their policing role, and work further with suppliers on traditional issues, while the unions tackle workplace-related issues, Kearney says.

Another alternative to auditing is for companies to create regional resource centres for their suppliers, he says. Nike is experimenting with this model in Vietnam. Kearney believes that if social accountability is to be an integral part of corporate culture in suppliers, it should be much better linked with technical and safety expertise and training. Younger professional managers in many contractors are more amenable to new ideas, says Kearney, but pressure for improvements must be continually applied from business procurement departments. “Today the power lies with the buyer,” he says.

Government action

Yet Kearney believes that brands, unions and NGOs should not overlook the role of governments in enforcing their own laws. “If governments were doing their job we wouldn’t need CSR,” he says, noting that the government of India is “sitting on 80 million working children and doing nothing”.

He cites the Multi-Fibre Agreement Forum as a success. The grouping of the World Bank, ILO, companies, civil society groups and workers has made some progress in places such as Bangladesh, Morocco and Lesotho in a collaborative way that attempts to focus on national competitiveness to convince governments to become more seriously involved in improving workers’ rights.

Companies cannot wait for consumers to get involved as ethical buyers, says Kearney. Consumers “don’t want to be bothered” and simply expect companies they buy from to solve the problems. He points out that after the recent factory collapse in Bangladesh, where workers died, retailer KarstadtQuelle was inundated with emails from angry German consumers and its reputation took a major blow.

As Gap and all other clothing retailers know, reputation is priceless – and in the current climate, there is nothing like a child labour scandal to sour it.

Companies act in Bangladesh

At the end of 2004, Bangladesh faced huge problems, with 600,000 workers laid off in the face of trade changes. The country has about two million workers producing garments for export, according to the ITGLWF.

The Multi-Fibre Agreement Forum – a group of concerned companies, NGOs, governments, and unions – created a buyers’ group and pressured the Bangladesh government to set up a social compliance unit, with unions, NGOs and companies involved.

The unit is looking at a number of labour-related issues, including health and safety. This is “moving ahead, moving slowly”, according to Kearney, who says political disruption is holding back progress.

Unions have their critics too

While it is often claimed that there’s a difference between head office policy and actions on the ground in business, so its with unions, according to sources familiar with their work. One company in Kenya, which has a good reputation for treating workers well, says their workers want nothing to do with local unions who claim to represent their interests. Many simply view local or national unions as an extra tax. One manager describes bored workers listening to an expensively dressed Kenyan union representative pitching them once a year for membership, arriving in a luxury car and gaining little traction with workers, particularly those with a good working relationship with management.