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Charity towards trade unions begins - but not at home
Financial Times
September 10, 2007
Renato Pambid is a Filipino lawyer working with the Workers Assistance Committee, a local labour group, in the sprawling Cavite export processing zone outside Manila. His work has recently included representing employees at the Korean-owned Chong Won Fashion factory who had been sacked after forming a union.
Picketing workers have been attacked by local security staff and by armed masked men wearing military fatigues.
As the dispute started to escalate last year, Mr Pambid and others visited the Manila office of Wal-Mart, which sells clothing produced at the plant by one of its suppliers, One Step Up. "At the start we were not expecting that Wal-Mart would intervene," says Mr Pambid. With polite understatement, he adds that the US retailer has a reputation for "not being amenable to union formation".
But in what he says was a first, Wal-Mart set up a joint meeting with the management and the union in an effort to work out a compromise.
It subsequently commissioned its own report into the dispute and then demanded that the management reinstate the sacked workers. No compromise resulted. So this year Wal-Mart and its suppliers cut their links with the factory.
Labour activists in North America who were involved in efforts to resolve the dispute say it could have done more. "It took Wal-Mart nine months to get to the point of confronting the management with the fact that the workers' right to freedom of association had been violated. They could have moved in a much more timely manner," says Bob Jeffcott, of the Maquila Solidarity Network, a Toronto-based labour rights group. David Schilling, supply chain specialist at the Interfaith Center on Corporate Responsibility, also says that Wal-Mart's response was flawed.
But both men welcome the retailer's efforts to try to resolve the dispute. "The company stayed longer than it has been the practice in the past . . . They reached out to discuss issues on the ground, which in the past they have been pretty reluctant to do," says Mr Schilling.
For most labour activists, Wal-Mart's low-cost mantra has made it the ultimate symbol of the abuses created by a global supply chain that pits factory owners in China or the Philippines against each other in a desperate battle for contracts. In 2005, for instance, activists tried to sue the retailer in the US over abuses such as excessive working hours and unpaid wages at factories in five different countries.
Many anti-sweatshop campaigners remain dismissive of its efforts to step up the monitoring of its vast supply chain in order to reduce abuses. The International Labor Rights Forum, which backed the attempted legal action, dismisses Wal-Mart's latest ethical sourcing report, saying the group's focus on low prices "all but ensures that it will make little progress in respecting workers' rights". It also highlights the clash at Chong Won, saying Wal-Mart's monitoring had failed to expose the problems at the factory.
But Wal-Mart's latest account of its ethical sourcing efforts also shows how it is changing in ways that could theoretically prevent the kind of crisis seen at Chong Won. In particular, the company says it wants to reinforce factory monitoring with efforts to create a "a new company-supplier relationship" that would involve a shift to "longer-term commitments" - a fundamental shift from the ultra-competitive, price-focused approach so bitterly criticised by the ILRF and others.
Wal-Mart also says it is beginning to look at how its own behaviour - such as demanding short lead times or last-minute design changes - can put undue pressure on suppliers and result in issues such as unpaid working or excessive overtime. "The overarching goal is to fully integrate labour compliance and social responsibility into all purchasing decisions," the report says.
The approach mirrors steps by companies that have taken a lead in efforts to improve their supply chains, such as Gap and Nike. But it raises questions over whether Wal-Mart's cost-focused buyers, the people who make the hard purchasing decisions, will listen to the ethical sourcing message. "We need to see evidence that the approach is being really integrated," says Mr Schilling.
Wal-Mart's proposed new approach also presents another challenge to a fundamental element of its corporate culture - its strongly anti-union record in the US. Gap, Nike, Marks & Spencer and others are starting to work with international unions and labour rights groups on efforts to educate their suppliers about workers' rights, arguing that an engaged workforce is the best monitor of what is happening in a factory. But the main text of Wal-Mart's ethical report contains only one mention of working with unions or local labour groups.
Wal-Mart's record at home has also complicated its efforts to draw up an international code of practice for suppliers, a move backed by Tesco, Carrefour and Metro, the European retail groups. The initiative includes standards far more ambitious than Wal-Mart's own corporate code of conduct.
It recognises, for instance, that "workers have the right to form trade unions of their own choosing", sets shorter maximum working hours and has comparatively strong language on the need to pay adequate wages.
Human Rights Watch in New York and the Clean Clothes Campaign in Europe have both pointed out that the code sets standards for Wal-Mart's suppliers, on issues such as trade union membership, that are at odds with the company's own anti-union attitude in the US. According to Maquila's Mr Jeffcott, Wal-Mart's domestic stance on unions can make it harder for the retailer to convince hard-pressed suppliers round the world that it is serious about the rights of their workers.
"It could be that a supplier doesn't really believe that Wal-Mart is serious… given its own history on the issue," he says.
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