Following Social Compliance To Avoid Potential Disasters In Garment Factories

On September 2012, the Pakistani headlines read as follow:

"Fire ravaged a textile factory complex in the commercial hub of Karachi early Wednesday, killing almost 300 workers trapped behind locked doors and raising questions about the woeful lack of regulation in a vital sector of Pakistan’s faltering economy."

On May 10th, 2013, the BCC reported the following:

"The death toll from Bangladesh's worst industrial accident has passed 1,000 as recovery teams continue to find more bodies in the wreckage."

Unfortunately, these are not isolated incidents in the garment industry. In the past decade, hundreds of cases have been reported in the Asian region of disasters in garment factories that cost thousands of people their lives, as well as losses of millions of dollars to the owners. Social compliance concerns like these not only affect the safety of millions of workers worldwide. They also threaten the thousands of brands that purchase from suppliers overseas.

Due to the labor-intensive nature of the garment industry, garment importers are at particular risk of facing severe losses in case of any potential disasters that may occur at the site of production. As a sensible importer, it is your foremost responsibility to investigate and make sure that your supplier is following all possible measures in his control to avoid any such disasters, prior to deciding to work with them. Before we begin a discussion on what are the most common compliance concerns that face garment importers, as well as the most effective measures that you can take to avoid them, we’ll first take a look at the potential consequences of any compliance violations undertaken by garment manufacturers.

Potential consequences of working with noncompliant factories

Being in violation of social compliances does not necessarily always result in physical damages in terms of factory destruction; there may be several other forms this violation can manifest itself. One such way concerns the ill-treatment of the labor force in the workplace, noncompliance with the quality standards laid out by the buyer, as well as outright violations of local laws and regulations. As many garment importers have found out the hard way, working with a noncompliant factory presents you with a variety of complications in the supply chain.

Retailers’ refusal to stock your products

A large majority of garment importers relay on distributing their products through widespread retail channels such as Target or Walmart. In such a case, having a factory that is noncompliant with social guidelines can result in major disruptions for your business. The retailer may express concern about noncompliance, and if the issue remains unaddressed then it may eventually terminate their relationship with you- this is most commonly seen when the violations are of an extreme nature, such as child labor or forced labor. If such a situation arises, you would have to face the trouble of seeking out a new distribution channel to market your garments.

Customs agents seizing your goods

Recently the US government has given more control to the customs authorities to regulate the flow of material into the county, seizing any and all products that appear to violate any social compliances. This is because there has been an ever-increasing number of situations where garment manufacturers compromise upon social compliances, raising questions regarding the working conditions and the overall practices followed at the workplace. This law was passed in 2016; ever since the U.S. Customs and Border Patrol has successfully seized more than four shipments that they suspected violated social compliances by using forced or child labor. This can be seen as a drastic increase considering that the only seizure based on these grounds last occurred in 1995.

To add to this, the US Department of Labor has compiled a list of goods and their originating countries that are suspected of being involved in practices such as a child or forced labor. These countries include China, Bangladesh, India, Malaysia, and Thailand among many others. When custom officials stop a garment shipment originating from one of these countries, it is a red flag for them to scrutinize the details and inspect whether the factory has abided by all social compliances. Therefore, it is essential for you to make sure that your supplier is following all social and legal compliances; otherwise, you risk potentially losing all your investment if custom officials do not allow the shipment to enter the US.

The backlash from your customers

In this day and age of technology, customers all around the world have access to information that they might not have had a few decades ago. This, coupled with the fact that social responsibility is an increasing trend in customer behavior, suggests that in case your supplier is not seen to be following all social compliances, you may lose out on a large chunk of your customer base. Several types of research conducted in the recent years have concluded that customers are in fact willing to pay a higher price for the product if they know that the products have been sourced sustainably and produced in a humane environment, following all social compliances and related protocols.

Especially in the case of garments, sustainably and ethically produced garments are in high demand by consumers who feel that they have a responsibility not just towards themselves to spend their money on quality products, but also towards the working conditions in which the garments are produced.

Hence, the age-old notion that "cheaper is better" no longer applies to garment- consumers are unwilling to buy from businesses that are seen to exploit their workforce or violate any other social compliances, no matter how cheap the products are. Companies that are seen as a proponent of human rights and adequate working conditions for the labor force are those that have seen steady growth in their sales and profitability, despite the slightly higher costs.

Worker strikes and production delays

Inhumane treatment of the labor force does not only upset consumers and results in large penalties enforced by the state; it also causes problems with your relationship with the workforce itself. For example, in 2013 about 10,000 workers in Cambodian garment factories went on strike to demand higher wages and improved working conditions. This strike lasted for a little over a month, resulting in losses amounting to thousands of dollars for the business. Similar strikes are seen all over the world, where workers gather to demand their rights by causing a halt in the production process, delaying production and eventually forcing the company to give in to their demands.

To give an example of this, The China Labor Bulletin also maintains a map of strikes among workers in China, of which it recorded 611 strikes in the manufacturing industry in 2016. A 2016 LaborLink survey of 70 factories in China and 119,000 workers found that 43 percent of workers were dissatisfied with their current job. And of this group, only 30 percent planned to stay at the factory for at least the next six months. These are some rather troublesome statistics, especially for companies with huge orders and tight deadlines because even the slightest of delay in their schedule might cause them huge amounts of money as a cost.

In addition to strikes and delayed production, labor turnover is also highly associated with not following social compliances properly. Because workers do not feel at ease working in harsh environments that do not provide them with their basic rights, they will want to switch to better positions- even if it means compromising on lower pays. So even if you might offer competitive salaries for your employees, they still might prefer to switch to a company that offers them a better working environment despite offering a lower income. The cost that goes into looking for and hiring suitable candidates to replace those workers will be quite high for a socially noncompliant company.

Common compliance violations and standards in garment factories

The garment industry is filled with cases of compliance violations; given that these companies are often located in low-income regions of the world, they are easily able to exploit their workforce because of the high unemployment prevalent in those areas. Garment manufacturing is a highly labor-intensive industry, and so manufacturers often mistreat their employees in order to churn out a higher volume of finished garments with a smaller number of employees in order to cut costs.

The news regarding how garment factories around the world do not follow even the most basic laws, such as a minimum pay scale, is fairly common. There have been numerous reports issued by different authorities all over the world where suppliers of multimillionaire companies such as Calvin Klein have found to be in violation of social compliances, including unfair wages, extreme overtime and nonexistent social insurances for the employees.

The following are some of the most common standards and laws that outline social compliance for garment manufacturers:

Garment factory compliance according to the SA8000 standard

This industry-standard outlines basic notions regarding social compliances in the garment industry, mainly based off of the United Nations Declaration of Human Rights, conventions of the International Labor Organization (ILO), international human rights norms and national labor laws. According to SA8000, there are nine requirements for social compliance, including:

1. Child labor

The factories are forbidden to employ any worker below the age of 15.

2. Forced labor

The factories are forbidden to employ any worker that has not joined the labor force voluntarily and is working under any kinds of threat or as a punishment.

3. Health and safety

It is obligatory for the factory to provide a safe and healthy workplace environment by taking all the effective steps needed to provide adequate health and safety standards for the workers so that they are not at risk of any potential injury or illness.

4. Freedom of association and collective bargaining

The factory must not take any steps to prevent the workforce from forming any trade unions to represent themselves; they must be allowed to collectively bargain if they wish to through their trade union.

5. Discrimination

The factory is prohibited to engage in any kind of discrimination amongst the workforce based on their religion, gender, culture or other related factors when hiring, providing remuneration, or access to facilities such as training.

6. Disciplinary practices

The factory is prohibited to engage in any kinds of corporal punishment, physical and mental torture or any other kind of abuse.

7. Working hours

The factory must be in accordance with local as well as international laws applicable to it regarding collective bargaining agreements as well as adequate breaks, public holidays and obedience of maximum working hours.

8. Remuneration

The factory is obligated to pay its staff a respectable living wage.

9. Management system

The factory must develop policies and procedures to implement and review compliance with the SA8000 Standard.

Some of the most common social compliance violations in the case of garment industries are as follows:

• Not providing adequate social insurance benefits
• Paying the workforce unfair wages which are not in accordance with minimum wage laws, mandatory overtime rates and withheld pay.
• Keeping the staff working in excess of local overtime limits
• Not regulating conditions regarding adequate fire safety, using protective gear, and not keeping the sanitation facilities up to date to ensure health and safety of the staff.

Brand and retail compliance standards

It is a common practice among large brands like Target, Walmart, and Nike to develop their own social compliance programs. Unless the suppliers are in accordance with these standards, they are not allowed to sell to the brands. These brands conduct regular factory audits to make sure that everything is in order. If suppliers wish to maintain healthy relationships with these brands, they must produce in accordance with the standards set out by them.

Social compliance for garment factories according to the national laws

Each country has a specific set of laws governing its industries, including the garment manufacturing industry. Hence, it may sometimes be possible that suppliers in different countries are subject to varying laws and regulations depending upon the national legislature. For example, even though most countries advocate factory workers to freely form and operate as a trade union, some countries such as China and Vietnam limits trade union membership and practices.

As another example, the minimum wage also differs significantly across different countries; Bangladesh is a very popular country for garment manufacturers, but unfortunately has some of the lowest wage laws in the world- these laws to are seldom enforced. It is common for employees to be exploited and paid a wage that does not even fulfill their basic necessities and requirements.

How social compliance audits can help garment importers ensure supplier compliance

Social compliance audits are deemed necessary in order to ensure that adequate work conditions and practices are met at the factory. The compliance audits can be broadly divided into two categories: official audits that are conducted by the brand, retailer or relevant government authorities, and unofficial visits which are carried out by an independent third-party specialist.

Conducting a pre-audit to measure garment factory compliance

A pre-audit is carried out prior to an official audit in order to make sure that everything is in order. It is common for brands to hire a third-party that specializes in auditing factories that offers several benefits. These can be conducted at different times:

Auditing before working with a new factory

This can help you make sure that you do not work with any supplier that is noncompliant of social responsibilities and laws.

Auditing after selecting a supplier

This ensures that the supplier remains committed to social compliances and that you can spot any emerging issues before they occur in order to save costs and quality problems.

Can audits be staged?

There exist several concerns regarding staged audits; factory management can predict an upcoming audit and prepare its workers accordingly beforehand. They might make it seem as if they are compliant where in reality they are not. However. a well-trained auditor may be able to spot any such staging. In any case, it is advisable to never forgo audits as they help tremendously in ensuring that your supplier is not lying to you and is actually following all laws and regulations.

Conclusion

Social compliance can help you avoid several issues that range from tremendous disasters on-site to a bad repute for your business. You should ideally carry out audits prior to selecting your suppliers, as well as frequently once you have selected the suppliers to ensure that they remain compliant. A social compliance audit is a cost that will save you major costs in the future if they are noncompliant.