Jukka Pääkkönen
translated by Linus Atarah
Unreasonably long working days and starvation wages are the rule rather than exception of the sportswear and sports equipment industry, concludes the latest research report published by Play Fair network.
”Workers producing for leading brands such as Adidas, Asics, New Balance, Nike and Puma earn starvation wages in spite of the fact that profits of the companies have shot up to millions, even for some billions of dollars”, commented British Neal Kearney, General Secretary of ITGLWF, international trade union of garment and textile workers on the report’s finding published in February.
According to Kearney, the report sets clear goals for the sector towards which they should strive to improve.
The report compiled by Play Fair network is titled “Clearing the Hurdles”. Unlike the report published last summer about the Olympic logo products, it does not trace individual products neither does it separate individual factories. Instead it draws an entire picture of the global industry producing sportswear and equipment. The targets are the biggest brand names with special focus on sports shoes and footballs.
Yue Yuen, the biggest sportswear manufacturer whose shoes are worn by every sixth consumer of sports footwear was selected for the research among the sportswear manufacturers.
Play Fair published its previous report concerning the whole sector of the industry prior to the Athens Olympic Games in the spring of 2004. The new report tries to evaluate whether working conditions have changed in four years and in the run up to next Olympic Games approaching. Also as background is the knowledge that the big sports companies who have been targeted by consumer rights groups have developed and adopted their own ethical programmes in 15 years.
Information from China, Vietnam, Indonesia, India and Thailand, according to the researchers, indicates that no significant improvements have been achieved in the industry. The report does concede that several brand names have worked to improve the situation. They have succeeded in eliminating from their supplier factories some of the most oppressive and humiliating practices but basic problems stemming from the production structure of the industry still remain.
The title of the report borrowed from hurdle race, names four important hurdles which the industry would have to overcome for better working conditions: obstacles to the right of workers to freely organize and bargain, insufficient living wage, widespread short-term working contracts and massive and sudden factory closures.
Trade union members still targeted
Already four years ago Play Fair network presented a work programme that could help improve the right of workers to freely organize and bargain in factories. Several leading brand name companies in different phases signed up to the programme, among them member companies of the American Fair Labour Association (FLA).
The new report has also given recognition to the fact that several brand name companies have publicly declared their support for freedom to organize and for active trade unions in their own ethical guidelines. In spite of this the report has given a raft of examples in occasions where a factory leadership has deliberately prevented the formation of trade unions or systematically haunted those attempting to organize them. The examples are from countries where the formation of trade unions is legal unlike in China and Vietnam.
The means by which trade unions are smoked out take different forms. In the most ruthless instances organized unions are easily isolated from others, or the factory infected with the trade union is relocated to a different place. The other more sophisticated extreme is “workers “committees ran by the factory leadership to prevent the emergence of a genuine trade union
So long as the client company does not have clear commitment to the formation of organized supplier unions, the factory leadership can scare away a trade union by hinting that the client would change to a different producer if a trade union emerges, the report notes.
Rising profits and starvation wages
Alongside the right to organise the most difficult hurdle to overcome in the sportswear sector seems to be the wage level of the energetic workers. The new report notes that the production and sale of sports garment and footwear is very profitable business which is also growing rapidly.
Why do brand name firms raking in huge profits not pay living wages workers?, the researchers ask.
The report provides examples where workers for the large brand name companies earn even lower than the national minimum wage. Perhaps the grimmest of the reported cases is that of China’s Joyful Long Company whose workers sew footballs for Nike, Umbro and Fila, on wages below half of the legal minim wage. Paying below the minimum is explained by the fact that partly or on the whole, overtime work accumulates up to 232 hours in a month.
Workers in the Tae Kwang Vina factory near Hanoi in Vietnam producing shoes for Nike struck in March to demand a raise on their 63-dollar monthly salary that was not even sufficient to cover the most basic daily needs.
Workers wages reflect only very little on the final prices of the products. According to estimates by sports giant Nike, the part of direct salary expenses on the unit price of sportswear is only 10 per cent. Nike’s biggest supplier Yue Yuen four years ago that salaries consist of only 12 per cent of the production costs.
In both estimates we are talking of the price of a pair of shoes at the factory gate. A consumer pays many times more in the shop compared to that price – and the part of workers’ wages is almost nonexistent in that price. In practice a 10 per cent raise in wages would increase the price of a typical sports shirt by 10-20 cents
Buyers drive down prices
The brand name companies defend themselves against the accusations of starvation wages with a reminder that what is taken as living wages in any country is very difficult to determine. According to the companies, there is no credible system for determining an acceptable wage level – that is why wages should be freely determined by local market conditions or through wage agreements. However, for example, Spain’s Inditex has succeeded in determining sufficient living wages in all of its procurement countries (see pages 20-21).
The researchers respond by presenting statistics which indicate that unit prices paid to producers have clearly declined within the last couple of years. Local producers are paid less for a shirt or a pair of shoes while demanding more of it to be produced – at the same time the prices of raw materials used in the production are rising.
”Today price, quality and time of delivery are no longer variables” (modifiable), says the report quoting David Birnbaum, company analyst of the garment industry. “Today a buyer has a fixed final price, fixed quality standard and fixed time to deliver clothing. If a factory is unable to sell according to the price demanded by the buyer, he goes elsewhere”
Neither have brand name companies’ schemes to increase productivity in factories led to any clear improvement in the wage level of workers, notes the report. In some instances, for example in the factories of shoe manufacturer Yue Yuen. productivity schemes have on the contrary led to tightening of the work pace and worsening working conditions.
The researchers have admitted that there is no easy solution to the chronic problem of starvation wages. As a solution they propose a collective co-ordinated project which directs sufficiently large procurements to suppliers who pay accepted wages.
Overtime, short term contracts, precarious work
The report of the Play Fair network harshly criticizes the sector that the risks associated with fluctuations in demand and changing trends have been transferred in the production chain of the sector to the tail end of it, onto the shoulders of workers. This happened with the help of overtime, short-term contracts and taking outsourcing too far. As a last measure to control risks are sudden factories closures plenty of which have been seen in the sector.
Researchers are grateful to companies in the sector developing ethical codes for, they have tried to intervene especially in the problem of widespread overtime in the textile and footwear industry. Suppliers have been demanded to stop placing orders involving unreasonably long days and that compensation be paid for overtime.
In reaction to the demand several producers have resorted to the use of so-called unregistered overtime many examples of which are mentioned in the report. One way of compensating for the short falls arising from undone overtime has been the widespread tightening of work pace and increasing of piece rate contracts. From the perspective of work conditions neither alternative is better than overtime.
Fluctuations in demand is also controlled by the use of short-term contracts, usually for two-month periods as well as chopping off the production chain to small subcontractors and home-based “independent entrepreneurs”. This is the reality especially in the football industry which, for the purpose of the research was done in three countries
Finnish organisations and NOC in dialogue
The Clearing the Hurdles research report was compiled by the trade union movement and Play Fair 2008 campaign network. Those behind it are the international trade union organization of textile, garment and footwear workers (ITGLWF), the biggest umbrella organization of the international trade union movement, ITUC, as well as Clean Clothes campaign operating in 12 European countries.
Play Fair network has at this moment membership of over 150 trade unions and non-governmental organisations in 34 countries. In Finland member organizations are Akava (Confederation of Unions for Professional and Managerial Staff in Finland), SAK (Central Organisation of Finnish Trade Unions), STTK (Finnish Confederation of Salaried, (Kemianliitto) Finnish Chemical Workers Union Employees), Finnish Trade Union Solidarity Centre (SASK) as well as Fair Trade Organisation (Repu)
The Finnish campaign organisations have agreed with the Finnish Olympic Committee that they will continue with the well-initiated dialogue between them to improve supervision of the sector’s ethical standards in co-operation with sports organizations.
