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Good help -- or bad?

The World Bank provides a significant amount of money to developing countries for development, health, environment, and economic needs. In just the first 3 months of the year 2000, the World Bank has announced 35 projects in 28 countries in Africa, Asia, Latin America, the Middle East, and Eastern Europe.¹ Multinational corporations often provide economic aid to countries in need. Companies such as UNOCAL, Microsoft, and Nike have donated money and products to aid underdeveloped countries, as well as brought needed jobs to depressed areas.^2-4 The United Nations has embarked on a mission of "formulating population policies that support sustainable development."⁵

All of this organization-reported good news is not the end of the story however. You have probably seen or heard about the April 2000 Washington DC protests of International Monetary Fund (IMF) and World Bank policies. Maybe you have heard accusations of Nike factories functioning as sweatshops. Perhaps you have wondered if the UN family planning policies in developing countries are actually helping people live better lives.

What is really happening when the global community attempts to help underdeveloped countries? Is this assistance helpful, or does it do more harm than good?

Employment vs. Sweatshop Labor: Nike

Western corporations, especially American ones, have branched out to underdeveloped countries. Navarro suggests that these corporations, in the capitalistic search for higher profits, look to the Third World in search of new markets, raw materials, and cheap labor.⁵ Corporations claim that this is a win-win situation: corporations find higher profits, while poorer countries get an economic boost in industry and jobs.^6,7 Others claim that while corporations find higher profits, poorer countries suffer decreased standard of living, increased environmental problems, and workers suffer abuses.^6,7

Sweatshop abuses

International labor abuses in sweatshops have begun to garner attention in the United States. A sweatshop is defined by the Department of Labor as a factory that is in violation of more than one labor law, such as child labor, minimum wage, overtime, fire safety, or forced overtime.⁸ Women make up the majority of sweatshop workers: 90% of sweatshop workers are female.⁸ A number of multinational corporations, such as Nike, have been accused of using sweatshop labor to manufacture apparel.

Although this section is about Nike, any number of multinational apparel or footwear companies could be substituted in its place. Nike, however, is an industry leader, not only by setting trends in apparel, footwear, advertising, and sponsorship, but also for setting industry standards about how to deal responsibly (or irresponsibly) with sweatshop allegations.

There are three major industry levels to consider when thinking about the sweatshop issue:

• Factories: The factory is where the sweatshop conditions exist.
• Corporations: The corporation (Nike) contracts out garment work to the factories.
• Monitoring Oversight: This independent organization establishes guidelines and monitors practices of corporations.

Monitoring Oversight: FLA vs. WRC

The factories and corporations have existed for years, while the monitoring oversight level is a newly devised method to make sure that corporations are treating their workers fairly. This level has not yet been established, and there are two separate monitoring organizations that are positioning for power: the Worker Rights Consortium and the Fair Labor Association.

The Fair Labor Association (FLA) is a product of the White House-initiated Apparel Industry Partnership, which brought together apparel and footwear companies, human rights groups, labor unions, religious organizations, consumer advocates, and universities.⁹ Their two main goals are:⁹

1. To take steps to protect workers worldwide.
2. To give consumers information to make informed purchasing decisions.

The Worker Rights Consortium (WRC) is the product of the United Students Against Sweatshops (USAS), workers, and human rights groups.¹⁰ Their main goals are:¹⁰

1. To benefit workers.
2. To provide a straightforward, practical, and implementable code of conduct system that is consistent with the mission of universities.
3. To provide an alternative to company-controlled monitoring.

Critiques

Although these organizations both want to monitor the factory/corporation relationship, their methods of accomplishing this differ in major ways. Some critiques of the FLA include:¹¹

• No guarrantee of public disclosure of the production process.
• Workers views were not incorporated into the development of FLA.
• Factory certification should not be included in the monitoring system.

Another critique of the FLA is that it does not ensure that workers are being paid enough to meet their basic needs. The difference between the FLA and the WRC on this issue can be determined by examining the "Wages and Benefits" section of each organization's Code of Conduct.

• Fair Labor Association Code of Conduct

  "Wages and Benefits. Employers recognize that wages are essential to meeting employees’ basic needs. Employers shall pay employees, as a floor, at least the minimum wage required by local law or the prevailing industry wage, whichever is higher, and shall provide legally mandated benefits."¹²

• Worker Rights Consortium Code of Conduct

  "Wages and Benefits: Licensees recognize that wages are essential to meeting employees' basic needs. Licensees shall pay employees, as a floor, wages and benefits which comply with all applicable laws and regulations, and which provide for essential needs and establish a dignified living wage for workers and their families. A living wage is a 'take home' or 'net' wage, earned during a country's legal maximum work week, but not more than 48 hours. A living wage provides for the basic needs (housing, energy, nutrition, clothing, health care, education, potable water, childcare, transportation, and savings) of an average family unit of employees in the garment manufacturing employment sector of the country divided by the average number of adult wage earners in the family unit of employees in the garment manufacturing employment sector of the country." ¹⁰

While the FLA ensures that workers make local minimum wage, it is common for the local minimum wage to be cut drastically to encourage corporations to build factories in that location. The local minimum wage is often not enough for workers to meet the basic needs of their family. The WRC Code of Conduct ensures that workers can afford to live on factory wages.

The FLA does address the "living wage" movement, not in its main document, but in the "Frequently Asked Questions" section of its web page:

• "Q. There is a movement to establish a 'living wage' in several jurisdictions in the United States and in other countries. Why doesn’t the agreement call for a 'living wage?'"
• "A. The document does not call for a 'living wage.' The code states, 'Employers recognize that wages are essential to meeting employees’ basic needs.' This is the language that all members of the Apparel Industry Partnership signed on to when the code was presented to the President in April 1997. The document goes beyond the language in the code by calling for a wage study to be conducted by the U.S. Department of Labor within six months. The study will examine the relationship between wages and basic needs of employees in apparel and footwear-producing countries and compile data on the market basket of goods used to establish the poverty level in these countries and to examine the relevance of these studies for the workplace code of conduct". ¹³

The FLA does not seem to have any arguments for not instituting a living wage provision, except that Apparel Industry Partnership members (which include corporations) have not agreed to it. While the U.S. Department of Labor study is important, the FLA Charter makes no provisions as to how these results will be used (if at all).

Nike makes its views on the FLA/WRC choice, as well as the "living wage" provision, completely clear. On April 27, 2000, Nike announced it will withdraw from long-term contract negotiations with the University of Michigan.¹⁴ The University of Michigan wanted Nike to comply with the developing Labor Standards and Human Rights Policy.¹⁴ This policy is likely to match many of the demands of the WRC, as the University of Michigan is a member.¹⁰

The University of Oregon also recently became a member of the WRC. On April 24, 2000 Nike Founder and CEO Philip H. Knight, an alumnus and $50 million donor of the University of Oregon, announced that he would no longer make any donations to the University of Oregon.¹⁵ His decision was a direct consequence of the University of Oregon's membership in the WRC. He claims that Nike is unfairly being held to higher standards than the University:

"No university, including the University of Oregon, can meet the WRC living wage and other code standards for food service employees, grounds keepers, clerical personnel or teaching assistants."¹⁵

Philip Knight is right in saying that the University of Oregon should also be held to the same living wage standards. However, if one is not doing it, it is not an excuse to let the other off the hook. All institutions should be paying their employees a living wage, and if it is not currently happening, institutions must be searching for ways to pay employees enough to meet their basic needs. Nike cannot claim to be considering its employees' best interests if the employees cannot make enough to live. For this reason, Nike should be more supportive of the WRC.

However, Nike has some concerns about the motives of the WRC, the proposed mechanisms, and especially the role of corporations in the WRC. First, Knight points out that the WRC is backed by U.S. labor interests like the AFL-CIO and UNITE, the apparel workers' union.¹⁵ He claims that the sole purpose of these organizations' interests in the WRC are to bring apparel jobs back to the United States.¹⁵ Knight is also concerned that the proposed monitoring sanctions are too harsh, and do not serve the purpose of monitoring -- to make improvements.¹⁵ Finally, Knight is angry that Nike and other corporations do not have a place at the WRC table to develop or implement the monitoring process.¹⁵ Nike also points out that it is making changes on its own, including student monitoring of factories.¹⁶ A report written by these students is also placed on their web page, and can be downloaded.¹⁷

Conclusions

Criticisms of both the WRC and FLA are important to improve the Code of Conduct for both. It would be naive to believe that these two organizations could easily compromise and begin to work together. The major factor stopping them is the WRC's belief that Nike and other corporations should not be included in the monitoring process. Although corporations are a major part of the process and their input is valuable, the current worker/corporation power dynamic makes it difficult to ensure that workers can truly be represented if corporations are at the table. However, if corporations are not included in planning the monitoring process, it is unlikely that they will participate willingly, which could ultimately push workers' abuses further underground. The WRC and FLA must find ways to reach common ground on this issue, so that the monitoring process can move forward, and workers can benefit.

References:

1. The World Bank Group. Daily Loan Summaries.
   Retrieved April 27, 2000 from the World Wide Web:
   http://www.worldbank.org/html/extdr/newprojects/
2. UNOCAL. Community Support & Humanitarian Assistance.
   Retrieved April 27, 2000 from the World Wide Web:
   http://www.unocal.com/responsibility/99report/comsupp.htm
3. Microsoft. Microsoft Giving: International Programs.
   Retrieved April 27, 2000 from the World Wide Web:
   http://www.microsoft.com/giving/iprog.htm
4. United Nations Population Fund (UNFPA). About UNFPA.
   Retrieved April 27, 2000 from the World Wide Web:
   http://www.unfpa.org/about/brochure/main.htm
5. Navarro, V. (1981). The economic and political determinants of human (including health) rights. In V. Navarro (Ed.) Imperialism, Health and Medicine(pp. 53-76). Farmingdale, NY: Baywood Publishing Company, Inc.
6. Cargill. (April 1997). NAFTA -- The Mexico factor. The Cargill Bulletin.
   Retrieved April 29, 2000 from the World Wide Web:
   http://www.cargill.com/today/bulletin/t041997.htm
7. Public Citizen. (December 22, 1998). NAFTA at Five Years Report Card.
   Retrieved April 29, 2000 from the World Wide Web:
   http://www.citizen.org/pctrade/nafta/reports/5years.htm
8. Feminists Against Sweatshops. (September, 1997). Frequently Asked Questions About Sweatshops and Women Workers
   Retrieved April 29, 2000 from the World Wide Web:
   http://www.feminist.org/other/sweatfaq.html
9. Apparel Industry Partnership. Fair Labor Association.
   Retrieved April 29, 2000 from the World Wide Web:
   http://www.lchr.org/sweatshop/main.htm
10. Worker Rights Consortium. Workers Rights Consortium for the enforcement of university licensing codes of conduct.
    Retrieved April 28, 2000 from the World Wide Web:
    http://www.workersrights.org/detailed_outline.html
11. Worker Rights Consortium. A renewed analysis of the Fair Labor Association and the sweatshop controversy that has rocked college campuses.
    Retrieved April 29, 2000 from the World Wide Web:
    http://www.umich.edu/~sole/usas/organizing/info/flacritique.pdf
12. Apparel Industry Partnership. (June 1999). Charter document Fair Labor Association.
    Retrieved April 28, 2000 from the World Wide Web:
    http://www.lchr.org/sweatshop/amendedFLA.htm
13. Apparel Industry Partnership. Frequently Asked Questions about the Apparel Industry Partnership.
    Retrieved April 28, 2000 from the World Wide Web:
    http://www.lchr.org/sweatshop/faq.htm
14. Nike. (April 27, 2000). Nike Reaffirms Existing Principles in College Partnerships: Opts to Withdraw from University of Michigan Contract Negotiations, Citing Changes in Material Terms and Undisclosed Business Standards Provisions.
    Retrieved April 30, 2000 from the World Wide Web:
    http://www.nikebiz.com/media/n_existing.shtml
15. Knight, P.H. (April 24, 2000). Statement from Nike founder & CEO Philip H. Knight regarding the University of Oregon.
    Retrieved April 28, 2000 from the World Wide Web:
    http://www.nikebiz.com/media/n_uofo.shtml
16. Kidd, D. (April 24, 2000). Student Monitoring Report: Intro from Nike
    Retrieved April 30, 2000 from the World Wide Web:
    http://www.nikebiz.com/labor/index.shtml
17. Austermuhle, M., Capobianco, L., Carr, E., Chakravaty, S., Chrobog, K., Dolle, J., Fugate, M., Ko, Y.J., Ledwith, R., Malesky, E., Paul, A., Singleton, C., Tracy, P., Tran, J., Wilhite, N., Zary, J., Maher, J., & Migliori, V. (April 24, 2000). Student Report on Factories Producing Collegiate Licensed Apparel for Nike, Inc.: An Overview of Conditions and a Critique of the PricewaterhouseCoopers Monitoring Process.
    http://www.nikebiz.com/labor/studentreport.doc

Dawn Haney, April 2000

Last Modified: 2/08/2004                           

Contact: Dawn Haney haneydaw@arches.uga.edu