A Solution to the International Child Labor Problem?
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Table of Contents
Executive Summary
I. Introduction
A. Overview
B. International Child Labor
C. Child Labor in the Apparel Sector
D. Codes of Conduct: A Recent Innovation
II. Codes of Conduct in the U.S. Apparel Industry
A. Introduction
B. Corporate Codes of Conduct
C. The Apparel Industry
D. Codes of Conduct of the Largest U.S. Retailers and
Manufacturers of Apparel
E. Development of Apparel Industry Codes of Conduct
F. Implementation of Apparel Industry Codes of Conduct
III. Implementation Experiences of Codes of Conduct in the U.S. Apparel
Industry
A. Introduction
B. Field Visits
C. Child Labor in the Apparel Industry
D. Transparency
E. Monitoring
F. Enforcement
IV. Conclusion
A. Child Labor in the Apparel Industry
B. Codes of Conduct in the U.S. Apparel Industry
C. Transparency of Codes of Conduct in the Apparel
Industry
D. Monitoring and Enforcement of Codes of Conduct in
the Apparel Industry
E. Recommendations
V. Appendices
Appendix A: List of Companies Surveyed
Appendix B: Company Questionnaire
Appendix C: Codes of Conduct Provided by Companies
Surveyed
Appendix D: Site Visits
Appendix E: U.S. Apparel Imports, by Region and
Country (1985-1995)
Appendix F: ILO Convention 138
Acknowledgments
EXECUTIVE SUMMARY
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.
B. Overview
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.
1. Child Labor in the Apparel Sector
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.
2. Codes of Conduct
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.
3. The Apparel Industry
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:
- Apparel manufacturers are primarily engaged in the design, cutting,
and sewing of garments from fabric. Some manufacturers are contractors or sub
contractors, which generally manufacture apparel from materials owned by other
firms. Larger manufacturers often contract production to many such contractors
and subcontractors in the U.S. and abroad. Some manufacturers are vertically
integrated, producing the textiles from which they make gar ments, or even
operating retail outlets.
- Apparel merchandisers generally design and market clothing, but
contract the actual production to manufacturers.
- Buying agents locate, qualify and inspect foreign
suppliers/producers of garments, negotiate with suppliers/producers, and often
monitor production for quality control and compliance with other standards.
They may be used by U.S. companies that do not have a large presence abroad, or
in addition to a U.S. company's buying staff.
- Retailers are primarily engaged in the distribution,
merchandising, and sale of garments to consumers. Apparel retailers include
department stores, mass merchandisers, specialty stores, national chains,
discount and off-price stores, outlets, and mail-order companies. A relatively
new development is the rise of electronic forms of retailing such as
interactive TV and on-line shopping services. Some retailers who sell their
own private labels go beyond their traditional role as distributors and become
directly involved in the design and sourcing of garments from manufacturers and
contractors.
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.
- A questionnaire on import sourcing and child labor policies was sent to 48
companies, representing U.S. apparel manufacturers, department stores, mass
retailers, specialty stores, and non-store direct marketers (mail order and
electronic home shopping).
- Forty-five companies responded to the questionnaire, three of whom said
that they regard all information provided as confidential. The remaining 42
companies all indicated that they acquire foreign-produced apparel, the ma
jority as direct importers (i.e., purchasing apparel directly from abroad for
their own account), others as indirect importers (i.e., purchasing apparel
domestically from U.S. companies that have imported the goods), or in both
forms. Follow-up telephone interviews were conducted with respondents to
obtain additional information.
1. Existence and Scope of Codes of Conduct
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:
- special documents (typically referred to as "codes of conduct")
outlining their values and guidelines in a variety of areas, including child
labor. These documents are a means for companies to clearly and publicly state
the way in which they intend to do business to their suppliers, customers,
consumers and shareholders;
- letters stating their policies on child labor circulated to all suppliers,
contrac tors and/or buying agents;
- compliance certificates, which typically require suppliers, buying agents,
or contractors to certify in writing that they abide by the company's stated
stan dards prohibiting the employment of children;
- clauses in formal documents such as purchase orders or letters of credit,
which make compliance with the policy a contractual obligation for suppliers;
- a combination of the above.
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:
- state a minimum age for all workers who make their products;
- refer to the national laws of the host country regarding the minimum age
of employment or compulsory schooling;
- refer to international standards (e.g., ILO Convention 138); or
- use some combination of the three.
In some cases, companies' policies prohibiting child labor in the production
of their goods do not contain any definition of child labor.
2. Transparency
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.
- Most of the respondents with child-labor policies indicated that they
had distributed copies of their policies to all suppliers, but few stated that
they had communicated their existence to a wider audience or engaged in educa
tional efforts. Many respondents stated that they did not know whether workers
were aware of the existence of their codes.
- A small group of companies indicated that they have tried to ensure
that production workers in overseas facilities know about their code or policy
by specifically requiring that copies of such a statement be posted in the
foreign factories from which they purchase.
- Only a few respondents solicited input from international
organizations, la bor unions, NGOs, or government agencies in developing or
implementing their codes of conduct.
3. Monitoring
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.
- Some companies use a form of active monitoring, which involves site
visits and inspections, by company staff, buyer agents or other parties, to
verify that suppliers are actually implementing the importing company's policy
on child labor.
- Some use contractual monitoring, whereby they rely on the guarantees
made by suppliers, usually through contractual agreements or certification,
that they are respecting a company's policy and not using any child labor in
production. This may be seen as "self-certification" by contractors
or suppli ers. Companies that use contractual monitoring in some cases have no
mecha nism for ensuring compliance.
- Some respondents indicated that they use a combination of active and
contractual monitoring.
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.
- Several of the companies that conduct such evaluations indicated that
com pliance with their policies on working conditions is an important factor in
the decision to place a production program with a contractor. These
evaluations, according to many, enable them to screen out contractors who do
not com ply with applicable legal or company standards.
- A few respondents indicated that such pre-contract inspections had
enabled them to avoid doing business with a facility that appeared to employ
under -age children, but most reported that when facilities were rejected, it is
usually for other reasons.
4. Enforcement
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.
1. Child Labor in the Apparel Industry
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.
2. Transparency
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:
- Managers of two-thirds of the plants visited indicated that they were
aware of codes of conduct prohibiting the use of child labor, particularly of
the codes issued by their U.S. customers. However, not all of the companies
that indicated they were aware of codes of conduct had available a copy of the
code of conduct (or contractual provision) that they could show and discuss
with the visiting Department of Labor official.
- Formal training of plant managers and supervisors about the codes of
con duct was not common in the six countries visited. About 30 percent of the
facilities visited where managers indicated awareness about codes of con duct
stated that they had received some formal training regarding the U.S.
companies' code of conduct. However, more than half of these facilities
produced for just two companies. Also, it was evident that the intensity of
the training varied widely from company to company.
- Posting of a U.S. garment importer's code of conduct is not commonplace
in most of the countries visited. In all, 21 of the 70 plants visited by the
Depart ment of Labor officials had posted a code of conduct of a U.S. customer;
7 of such plants (out of 8 visited in that country) were in El Salvador. The
number of plants visited in each of the other countries where codes of conduct
were posted was: Dominican Republic, 2; Honduras, 1; Guatemala, 2; India, 2;
and the Philippines, 7.
- Although a significant number of suppliers knew about the U.S.
corporate codes of conduct, and codes were posted at 30 percent of the plants
visited, meetings with workers and their representatives in the six countries
sug gested that relatively few workers are aware of the existence of codes of
conduct, and even fewer understand their implications.
- Department of Labor officials found a mixed record regarding the extent
to which host governments, NGOs, and business organizations were familiar
with codes of conduct and their implications.
3. Monitoring
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:
- All plants exporting garments to the U.S. that were visited confirmed
that they are subject to regular visits by their U.S. customers or their agents
to verify product quality and to coordinate production and delivery schedules.
About 90 percent of the companies visited stated that monitors/inspectors
verifying product quality generally also examined "working conditions"
in the plant, with emphasis on safety and health issues (climate control,
ventila tion systems, fire escapes, etc.).
- Monitoring for compliance with provisions of the codes of conduct of
U.S. garment importers dealing with labor standards and child labor in particu
lar is less common. Foreign suppliers that are wholly owned by a U.S.
corporation, or contract directly with a U.S. corporation with a presence
abroad, seem to be subject to the most frequent and most thorough monitor ing of
codes of conduct, including child labor and other labor standards.
- A few U.S. corporations particularly manufacturers tended to have
structured monitoring of all aspects of their codes of conduct and subjected
their foreign subsidiaries to such disciplines.
- There was also evidence from the field visits of numerous instances of
con tractual monitoring of codes of conduct. A reliance upon a form of contrac
tual monitoring is most prevalent in the case of U.S. retailers which do not
have a significant presence abroad. In these situations, the burden of moni
toring compliance with the U.S. importer's child labor policies rests with the
foreign agent, contractor or subcontractor, typically through a certification
process. The role of the U.S. importers in monitoring these situations is
minimal.
- Site visits confirmed that some U.S. importers screen foreign garment
con tractors prior to entering into a supply relationship.
4. Enforcement
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.
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