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Clinton's New ''No Sweatshop'' Agreement

A small step or a great leap forward for the rights of workers?
by Tim ConnorCommunity Aid Abroad
September 22nd, 1997

In April this year, with much fanfare, US President Bill Clinton announced the introduction of a new "No Sweatshop" Code of Conduct for US Apparel and Footwear companies. The code is voluntary, but high profile companies like Nike Inc., Reebok International Ltd. and Liz Claiborne Inc. were among the ten initial signatories. These companies agreed that a set of minimum standards for working conditions in factories would be adhered to in the production of their goods -- wherever that production occurs.

Generally speaking the response of the media, both in the US and internationally was very positive, heralding the move as a big step forward in the fight to eliminate sweatshops. For Clinton it was something of a coup. During his first election campaign his rhetoric about putting pressure on countries like China to improve their record on human rights had been strong, but his actions as President had proved those words empty. He had renewed China's most favoured nation trading status despite evidence of extreme human rights violations and had been accused of accepting election funding from both the Chinese government and Indonesian businessmen. His image as a President committed to human rights was sagging. The Code allowed him to present himself as working for human rights through negotiation and persuasion rather than legislation.

For the companies signing on to the Code the positive publicity was also welcome, particularly for those who had been put under pressure by allegations that their goods were being produced under exploitative conditions. Sportswear giant Nike had received a battering in the US press only weeks before with the release of a Vietnam Labor Watch report on working conditions in Nike-producing factories in Vietnam. The report alleged that employees of Nike's contractors are expected to work up to 12 hours per day in noisy, hot factories filled with the smell of paint and glue; that their pay for eight hours work is inadequate to pay for three basic meals; and that factory supervisors routinely engage in conduct specifically designed to humiliate workers, eighty per cent of whom are women.

The Code was the result of six months of negotiation between members of the Apparel Industry Partnership -- a task force of companies and human rights organisations selected by Clinton and facilitated by Gene Sperling, chairman of the president's National Economic Council. The company members of the partnership were the same ten who were initial signatories to the code. The human rights groups involved are well respected and include the New-York based Lawyers Committee for Human Rights, the Robert F. Kennedy Memorial for Human Rights and the Interfaith Center for Corporate Responsibility.

Despite this, the code was condemned by many human rights and labour groups. You don't have to look too hard to see why. It only requires that workers be paid the legal minimum wage in the country where the factory is located. Many countries deliberately keep their minimum wage extremely low in order to attract and keep foreign investment A UN study in 1989 found that 80% of Indonesian women who were paid the minimum wage were malnourished. The legal minimum wage in Indonesia has gone up since then but Indonesian NGOs say it is still well below what is need to meet workers basic needs, particularly if they are living and working in urban areas.

Further, the code stipulates that workers cannot be required to work more than 60 hours a week or the local legal limit on working hours, whichever is lower. With contractors able to pay such low wages, however, this requirement is of little use to workers. They will have to "voluntarily" work much longer hours in order to get their basic needs met. Thus the code allows companies to put a "no sweat" label on their product, even when the workers making them are working up to 84 hours a week for less than 40 cents an hour and they and their families are struggling to survive.

On the upside, signatories to the Code agreed to ban forced labour and child labour, to prevent harassment or abuse, not to discriminate and to provide a safe and healthy environment. Most importantly, they agreed to recognise and respect the rights of employees to freedom of association and collective bargaining. This has been a key demand of organisations concerned about sweatshops -- until workers are able to form unions they will remain relatively powerless and easily exploited. It was in order to win agreement to this requirement that the human rights groups involved in the Partnership were willing to accept legal minimum wages as the wage standard in the Code. They reasoned that with the right to form unions and bargain collectively, workers would be able to negotiate better wages and conditions for themselves.

With these more positive elements of the code there are two concerns. One is that the companies will interpret them so loosely as to render them meaningless, and the other is that the system of monitoring the code will be so lax that it will be largely ignored at the factory level.

The way in which the right to organise will be interpreted is particularly important. In a document called "Nike's responses to questions regarding global working conditions", which Nike put out on May 15, 1997, the question "Why doesn't Nike let its workers join trade unions?" is answered like this:

We do. In more than 30 countries where Nike products are made, worker representation spans a full spectrum from worker management talking groups to full trade union activity. Nearly all our Indonesian factory partners have either a national or factory union. . .

The document goes on to argue that where union activity is illegal, Nike encourages the formation of "worker-management work groups".

The "national union" in Indonesia is the government union -- the SPSI. It is closely associated with the Indonesian military, with many of the top positions being held by former generals. When workers attempt industrial action in Indonesia it is generally the SPSI which calls in the army to break up demonstrations and get them back to work. It is this union which operates in the majority of Nike-producing factories in Indonesia, and Nike's description of it as representing "full trade union activity" does not bode well for attempts to get genuine worker representation in their contractors' factories.

Of course, if companies like Nike insist on interpreting the Code in this way it will be open to the human rights groups in the Apparel Industry Partnership to revoke their right to claim to adhere to the code. The Partnership has given itself nine months to get a monitoring system in place. Once the code is fully in operation, it's likely that there will be some very hard fought negotiation over whether each company has done enough to be held to be adhering to the code.

It is recognised that these negotiations will be particularly contentious where factories in China are concerned. The labour and human-rights groups involved in the Partnership initially called on the companies to pull out of China because the Chinese government's restrictions on the rights to freedom of association and collective bargaining are so extreme. The apparel makers refused, and eventually both sides agreed that the companies should take steps -- still to be worked out -- to promote freedom of association and the right to bargain collectively in their Chinese factories. In the words of Jay Mazur, task force member and president of the Union of Needletrades, Industrial and Textile Employees, "China represents a special kind of problem. China has to be dealt with once this thing gets off the ground."

Human rights groups were also critical of the Clinton code's position on monitoring. Companies signing on to the code agreed to "independent external monitoring" but the original wording of the code suggests that the companies will choose their own monitors, with human rights groups and NGOs playing the secondary role of certifying monitors. Such a system would allow companies to select those monitors which, while doing "just enough" to be accredited, were least likely to bring in a highly critical report. It is also unclear from the Partnership's initial report when, if ever, a negative report on a company's performance would be made public.

A subcommittee of the Apparel Industry Partnership has been set up to clarify how monitoring will be implemented. This committee has sought input from a wide range of groups and in the US and abroad and has received some extremely well argued and thoughtful submissions. It is to be hoped that the companies who have signed the code will be willing to agree to a system of monitoring which is stringent, independent and, where possible, involves worker representation.

The Clinton Code, then, is at best a stepping stone towards a code which ensures real protection for workers. Such a code would include protection of workers' rights to organise independently and to bargain collectively and a guarantee of rates of pay which would allow them to earn enough in a standard working week to at least cover their basic needs. It would also include monitoring by an independent body which was trusted by all parties and invovled proper representation of workers. How useful the code is as a stepping stone to more effective protection will become clear as the members of the Apparel Industry Partnership resolve how the code will be monitored and clarify how the right to organise will be interpreted and applied in a country like China. A growing number of increasingly well organised and cooperative human rights and worker groups around the world will continue to maintain pressure on the copmanies involved in the hope that the Code will amount to much more than a public relations coup for Nike, Reebok and Clinton.

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Tim co-ordinates Community Aid Abroad's Nike Watch campaign. The views expressed here are his own and not necessarily those of Community Aid Abroad. If you'd like to receive monthly updates about the campaign by email you should send mail to majordomo@sydney.caa.org.au with the following message in the body of the email: subscribe nike-interested.