THE APPAREL INDUSTRY
AND CODES OF CONDUCT:
A Solution to the International
II. Codes of Conduct in the U.S. Apparel Industry
III. Implementation Experiences of Codes of Conduct in the U.S. Apparel Industry
A. Congressional Mandate
This report is the third volume in ILAB's international child labor series. It focuses on the use of child labor in the production of apparel for the U.S. market, and reviews the extent to which U.S. apparel importers have established and are implementing codes of conduct or other business guidelines prohibiting the use of child labor in the production of the clothing they sell. The report was mandated by the Omnibus Consolidated Rescissions and Appropriations Act of 1996, P.L. 104-134.
A recent development, corporate codes of conduct and other business guide lines prohibiting the use of child labor are becoming more common, as consumers as well as religious, labor and human rights groups are increasingly calling upon com panies to take responsibility for the conditions under which the goods they sell are being manufactured. Many U.S. companies that import apparel have adopted codes of conduct that prohibit the use of child labor and promote other labor standards. For purposes of this report, the term "codes of conduct" is used generically to refer to various types of corporate policies and standards on child labor and other work ing conditions. These instruments take different forms codes of conduct, state ments of company policy in the form of letters to suppliers, provisions in purchase orders or letters of credit, and/or compliance certificates.
The term "child labor" generally refers to any economic activity performed by a person under the age of 15. Not all work performed by children is detrimental or exploitative. Child labor does not usually refer to "light work" after school or legitimate apprenticeship opportunities for young people. Nor does it refer to young people helping out in the family business or on the family farm. Rather, the "child labor" of concern is generally employment that prevents effective school attendance, and which is often performed under conditions hazardous to the physical and men tal health of the child.
There are no reliable statistics on the rate of child employment in any par ticular economic activity, including the apparel sector. Most information on child labor in the garment industry comes from eyewitness accounts, studies by non -governmental organizations (NGOs) and academicians, reports by journalists, and studies by the International Labor Organization (ILO).
Anecdotal information gathered during the preparation of this report indi cates that in some of the countries examined, fewer children may currently be work ing on garment exports for the U.S. market than two years ago. A dramatic example involves Bangladesh, where large numbers of children worked in garment factories
as recently as 1994. International media attention and threats of boycotts and can celled work orders led to the dismissal of thousands of child workers from the garment sector unfortunately with no safety net in place for them. Thus, it is possible that in the absence of government programs to assist the children, the precipitous dismissal of child workers can endanger, rather than protect them. More research is needed so that governments, industry, international organizations, and others concerned with the welfare of children are better equipped to design appro priate programs. It is clear, however, that local and national commitments to univer sal and free education for children are immediate and positive steps which can and should be taken.
One reason for any potential downward trend in the use of children in the garment industry may be the widespread adoption in the last several years of U.S. company codes of conduct prohibiting child labor. This potential downward trend may also be the result of (1) greater public awareness about child labor and its use in export industries; (2) changes in the garment industries of exporting countries tend ing to eliminate subcontractors where the use of child labor is most likely to occur coupled with policies to the same effect by U.S. importers; and (3) concerns that importing countries could enact legislation banning the importation of products made by children. Most likely all of these factors have worked in a mutually-reinforcing way to reduce the use of child labor in the export sector. On the other hand, there remains continuing evidence of child labor in the apparel industry of some countries, including the use of child labor in homework. To be any more definitive, further information is needed.
Voluntary codes of conduct have become increasingly common among U.S. corporations in recent years, particularly in the apparel sector. They have their roots in ethical guidelines for multinational corporations developed in the 1970s and vol untary codes of conduct developed by private groups during the 1980s. The first apparel company code of conduct was adopted in 1991. Most other codes have been developed in the last two or three years.
United States corporations have adopted corporate codes of conduct for a variety of reasons, ranging from a sense of "social responsibility" to pressure from competitors, labor unions, the media, consumer groups, shareholders, and worker -rights advocates. The U.S. Government has also encouraged U.S. corporations to adopt model business principles for their overseas operations.
The U.S. is the world's largest importer of garments. Imports of garments have been increasing steadily since the 1970s. Between 1985 and 1995, U.S. imports of apparel grew in current dollars by 171 percent, reaching nearly $34.7 billion. In that year, the U.S. imported apparel products from 168 countries.
The U.S. apparel industry is made up of a complex chain of actors whose functions often overlap. The industry includes the following entities:
C. Codes of Conduct in the U.S. Apparel Industry
In order to gather information on the extent and implementation of U.S. garment importers' codes of conduct containing child labor provisions, the Depart ment of Labor conducted a voluntary survey of the largest U.S. retailers and apparel manufacturers, based on their level of sales in 1995 as reported in publicly available documents.
Thirty-six of the 42 companies indicated that they have adopted a policy specifically prohibiting the use of child labor in the manufacture of goods they im port from abroad. These policies take different forms:
Corporate codes of conduct that address labor standards vary from company to company with regard to the specific labor standards included. Some or all of the following elements are found in various codes: (1) prohibitions on child labor; (2) prohibitions on forced labor; (3) prohibitions on discrimination based on race, reli gion, or ethnic origin; (4) requirements to ensure the health and safety of the work place; (5) provisions on wages, usually based on local laws regarding minimum wage or prevailing wage levels in the local industry; (6) provisions regarding limits on working hours, including forced overtime, in accordance with local laws; and (7) support for freedom of association and the right to organize and bargain collectively.
U.S. corporate codes of conduct in the garment industry also differ with respect to how the labor standards are defined. The standards used to define child labor vary significantly from company to company. For example, a company's policy statement may:
In some cases, companies' policies prohibiting child labor in the production of their goods do not contain any definition of child labor.
An important issue regarding implementation of corporate codes is their trans parency, or the extent to which foreign contractors and subcontractors, workers, the public, NGOs and governments are aware of their existence and meaning. Transpar ency reinforces the message of codes and leads to more credible implementation. When transparency is lacking, interested parties cannot benefit fully from a code of conduct.
Monitoring is critical to the success of a code of conduct; it also gives the code credibility. Yet, most of the codes of the respondents do not contain detailed provisions for monitoring and implementation, and many of these companies do not have a reliable monitoring system in place.
Respondents indicated that they utilize a variety of means to monitor that their codes of conduct or policies on child labor are respected by their suppliers.
Active monitoring may be done through regular checks, formal audits or evaluations, or special visits by corporate staff. The frequency and intensity of visits vary greatly from company to company. For example, some companies may focus their site visits on their larger suppliers or suppliers where there have been alleged problems, or may only monitor those facilities from which they import directly or which manufacture their private-label merchandise.
Contractual monitoring shifts at least part of the burden of responsibility for ensuring compliance with codes of conduct onto the foreign manufacturer, the sup plier or the buying agent. Even when monitoring is primarily contractual, there are instances in which the U.S. corporation requires documentary proof of compliance or reserves the right to carry out on-site inspections.
While technically not a monitoring activity, evaluation of prospective con tractors with regard to labor standards is becoming an important aspect of code implementation. Seventeen of the companies that responded to the survey stated that they have a process in place to evaluate overseas facilities before they establish a business relationship with them. Such on-site evaluations or inspections have long been made primarily to verify whether the facilities have the physical capacity to meet quality and quantity specifications. Increasingly, the working conditions and employment practices of prospective contractors are also being evaluated, screening out companies that are violators or have the potential for being so in the future.
Enforcement of codes of conduct refers to how U.S. companies respond to violations of their codes of conduct. The vast majority of respondents stated that they have never found any violation of the child labor provisions of their codes; some companies attributed this to their efforts to evaluate and carefully select suppli ers before entering into contracts with them, while others indicated that child labor violations of their codes are less common than other types of violations, such as safety and health.
Most respondents stated that, faced with an allegation of violation of their code of conduct, they would first investigate to confirm the use of child labor and then impose enforcement measures. Enforcement policies range from the more severe immediate termination of the business relationship to more tempered responses, including demand for corrective action (e.g., dismissal of under-age work ers), cancellation of specific orders, and placement of the violating supplier on probation.
D. Implementation Experiences of Codes of Conduct in the U.S. Apparel Industry
Department of Labor officials visited six countries where there is extensive production of garments for the U.S. market the Dominican Republic, El Salvador, Guatemala, Honduras, India, and the Philippines. The objective of the visits was to learn about foreign suppliers' approaches to the implementation of the established child labor policies of U.S. importers. Interviews were held with as many relevant persons or organizations as possible associated with the apparel industry, i.e., Labor Ministry officials, manufacturers, plant managers, buyers, trade associations, unions, workers, community activists, human rights groups, organizations concerned with children's issues, and other NGOs. At the beginning of each interview, Department of Labor officials indicated that the purpose of the interview was to gather informa tion for a public report, and any information collected could be used for that pur pose.
The central element of the field visits was the opportunity to discuss matters related to the existence and implementation of codes of conduct with managers and workers of plants producing apparel for the U.S. market. Department of Labor officials visited 74 apparel-producing plants and 20 export processing zones and met with key representatives of the garment industry and more specifically of the garment export industry in all six countries. The results of interviews regarding the 70 plants determined to be exporting to the U.S. market at the present time are reported in the study.
The consensus of government officials, industry representatives, unions and NGOs interviewed by the Department of Labor in the Dominican Republic, El Salva dor, Guatemala, and Honduras is that child labor is not now prevalent in their gar ment export industries. In the very few cases where child labor was mentioned, the children were 14 or older. However, the use of workers 15 to 17 is common and there may be extensive violations of local laws limiting the hours for workers under 18.
There was some anecdotal information about the prior use of child labor in the garment industry in Central America. Labor union representatives stated that about two years ago, the garment export industry began to dismiss young workers to avoid adverse publicity in importing countries. Often plant managers no longer hire young workers (14-17 years of age) even if they meet domestic labor law or com pany code of conduct requirements. However, there are also some reports of fraudulent proof-of-age documents being used by child workers to seek jobs in the garment industry. There continue to be allegations in Guatemala of children working for small subcontractors or in homework in the San Pedro de Sacatepequez area.
Meanwhile, it is clear that children continue to work for subcontractors and in homework in the Philippines and India. They perform sewing, trimming, embroi dering and pleating tasks. It is also the case that children are not prevalent in the larger factories in the Philippines, and that recently plant managers in India have become more concerned about not using child labor.
While most survey respondents indicated they have distributed their code of conduct to all suppliers, many said they were not certain if workers knew about their code. Field visits in six countries revealed that:
While most respondents monitor foreign suppliers for quality of product and scheduling coordination, monitoring of child labor policies is far less common. Field visits revealed that:
Foreign plant managers said factories that have passed the screening process and have become contractors of U.S. apparel importers may face a range of correc tive measures should they fall short in complying with codes of conduct. Examples of corrective measures cited included changes to the physical plant (improvement of bathrooms, eating facilities, lighting, ventilation), monetary penalties, immediate dis missal of young workers, and termination of contracts.
Foreign plant managers and other industry officials stated continued access to the U.S. market is a very large incentive for overseas garment producers to meet quality/timeliness requirements and comply with codes of conduct.
E. Conclusions and Recommendations
Based upon the information collected from the voluntary survey of 48 U.S. apparel importers and site visits to six countries producing garments for the U.S. market, the Department of Labor found that codes of conduct can be a positive factor in solving the global child labor problem. Most of the large U.S. apparel importers responding to the voluntary questionnaire have adopted codes prohibiting child labor in garment production and some are clearly committed to their implementa tion. This is a remarkable change in a matter of just a few years.
Codes of conduct are not a panacea. Child labor remains a serious problem, with hundreds of millions of working children around the world. However, the presence of children in the garment export industry may be reduced by the imple mentation of codes of conduct. It is also possible that changes induced by codes of conduct could have positive spillover effects for children more generally, e.g., a greater commitment of a foreign country to compulsory education for children. However, this relationship requires further study.
Finally, because codes of conduct seem to be tools used by large apparel importers, there may remain smaller importers without codes of conduct still willing to overlook the working conditions of the plants in countries from where they pur chase their garments. This question also deserves further study.
Consistent with the important efforts already undertaken by many U.S. ap parel importers, the Department of Labor recommends that U.S. companies consider whether some additional voluntary steps might be appropriate:
1. All actors in the apparel industry, including manufacturers, retailers, buying agents and merchandisers, should consider the adoption of a code of conduct.
If all elements of the apparel industry have a similar commitment to eliminat ing child labor, this would have a reinforcing impact on the efforts that the leaders in the industry have made. Trade associations should consider whether they could increase their technical assistance to help assure that the smaller companies in the industry can achieve this objective.
2. All parties should consider whether there would be any additional benefits to adopting more standardized codes of conduct.
There is a proliferation of codes of conduct. Some foreign companies and producer associations are even drafting their own codes. The definition of child labor differs from code to code, thereby creating some uncertainty for business part ners and workers as to what standard is applicable.
3. U.S. apparel importers should consider further measures to monitor subcontractors and homeworkers.
Since most of the violations of labor standards, including child labor, occur in small subcontracting facilities or homework, U.S. apparel importers should consider further measures to monitor subcontractors more closely.
4. U.S. garment importers particularly retailers should consider taking a more active role in the monitoring/implementation of their codes of conduct.
The implementation of codes of conduct is a complex matter, and a relatively recent endeavor. Implementation seems best and most credible when U.S. companies get directly involved in the monitoring. There is little incentive for for eign companies to comply with a U.S. importer's code of conduct if there is no verification of actual behavior.
5. All parties, particularly workers, should be adequately informed about codes of conduct so that the codes can fully serve their purpose.
In the supplying countries, managers of enterprises are generally familiar with the codes of their clients. Workers, however, are seldom aware of codes of conduct of the U.S. corporations for which they make garments. NGOs and foreign governments are also not fully informed about codes of conduct.