Global Labor Organizing Discussion

No Sweat? New Labor Forum • 91

By Jeff Ballinger

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New Labor Forum 17(2): 91–98, Summer 2008 Copyright © Joseph S. Murphy Institute, CUNY

ISSN: 1095-7960/08 print DOI:10.1080/10957960802026838


NO SWEAT? Corporate Social Responsibility and the Dilemma of Anti- Sweatshop Activism

IT’S TIME THAT LABOR ACTIVISTS COME TO ACKNOWLEDGE WHAT SOME PROMINENT BUSI- ness scholars have concluded: that Corporate Social Responsibility (CSR) has proven wholly ineffective. The website of M.I.T.’s Sloan School of Business in- troduces its video Making Globalization Work for All with the following blunt

assessment: “These speakers share a bleak per- spective: A decade’s-worth of high-profile ef- forts to change sweatshop conditions in over- seas apparel factories hasn’t worked.”

Notably, Richard Locke of Sloan is the per- son responsible for the website’s “bleak assess- ment.” Locke’s work is significant because Nike, an early-adopter of CSR strategy, accorded him unprecedented access and his research came at a time when the shoe and apparel giant was making public fairly reliable factory-by-factory audit information.

In late-2005, Locke invited Nike’s top Cor- porate Social Responsibility official, Hannah

Jones, to the Sloan School where she said, “There’s no point in Nike having 96 monitors on a factory floor day in and day out monitor- ing overtime, if overtime is being caused way up the supply chain. So Nike is scrutinizing its own behavior as a buyer. We must incentivize suppliers to become part of business decision- making.” The “forced overtime” issue was iden- tified as a major concern in Nike contract-fac- tories as far back as 1991 (“World Shoe Giants Rape Worker Rights”—headline in Media In- donesia newspaper). Nike’s latest CSR report posits the modest goal of diminished “forced overtime” by the year 2011.



92 • New Labor Forum J. Ballinger

Similarly, in an interview with Corporate Crime Reporter’s Russell Mokhiber, Professor Ronnie Chatterji of Duke University says, “Af- ter years of relative futility and millions of dol- lars spent, progressives who are concerned about market failures and their impact on the common good need to do the responsible thing and end their fixation on corporate social re- sponsibility. It is time to recognize that most market failures can only be solved by govern- ments and multilateral agreements and progressives need to redirect activist pressure appropriately.”


HOW IS IT THAT FIFTEEN YEARS OF ANTI-SWEAT-shop activism failed both consumers and workers so miserably? A great deal of the blame must be apportioned to CSR strategies that changed the media frame away from the workers who continue their struggle for dignity and fundamental rights amid still-appalling conditions. Now, the focus is on debates over vague and unen- forceable corporate codes of conduct, reports by ubiquitous consultants and compromised academics, and confer- ences held thousands of miles away from the factories.

During the late-1970s, the big-name brands and department stores began outsourcing production to contractors in the most corrupt and repressive places in the world. At about the same time, changes in information-sharing tech- nologies made it possible for activists to link up with nascent unions and groups of protesting workers. While business school case studies were heaping praise on corpora- tions for shedding responsibility for manufac-

turing, the seeds were being sown for a tremen- dous upheaval that would come to fruition in the mid-1980s, when the contractors’ brutal practices were exposed.

When executives at transnational corpo- rations (TNCs) awakened to the tacit alliance between Third World workers and wealthy consumers, it became a top priority to change the media frame. In the late-1990s, Nike, for example, built up its CSR department to over 90 staff members, while other departments were suffering layoffs due to declining sales not unrelated to the sweatshop story. Around the same time, Phil Knight, the company’s CEO, requested a meeting with the editorial board of The New York Times. Bob Herbert, an opin- ion columnist, had written several anti-sweat- shop columns, three of which had featured Nike workers from Indonesian factories who had

been sacked for leading protests. Herbert ex- plained to me that the CEO complained about the critical (and quite moving) columns and

How is it that fifteen years of anti-sweatshop activism failed both consumers and workers so miserably? People in the industry acknowledge . . . that the “default position” of low- skilled manufacturing is exploitation and vicious cost-cutting.



No Sweat? New Labor Forum • 93

asked the Times’ editorial board if it had any control over what columnists chose to write about. Though the board replied that it did not, Herbert ceased writing about sweatshop issues after that meeting.

Knight’s Nike and other sweat-stained TNCs were greatly aided by the 1996 Clinton initiative, the Apparel Industry Partnership (AIP), which brought together UNITE, RWDSU, religious investors and several hu- man/consumer/labor rights groups with lead- ers in the apparel industry. Chief among the demobilizing outcomes of the AIP were: 1. the elevation of the “self-regulation” idea (factory codes of conduct and “social audits” of suppli- ers) to constitute a “best practice,” and 2. a con- comitant de-emphasis on livable wages for cheated and abused shoe and apparel workers. It is not too much of a stretch to say that this “partnership” bought time, in effect, for the worst of U.S.-based shoe and apparel brands. The anti-sweatshop movement had expected the globalized labor movement to either lead or follow in the campaign; instead, they got in the way.

Because the anti-sweatshop movement

lacked a power center, it depended on jujitsu; Nike’s own promotional strategies were turned into counter-narratives as Indonesian workers were juxtaposed with the company’s brand strategy of depicting strong women in adver-

tising. While the lack of a power center enabled activists to pose a daunting rhe- torical challenge to sweatshop globaliza- tion, it made the groups vulnerable to the Clinton/Nike “divide and rule” strategy, isolating and marginalizing their most implacable critics by inviting them to join in a “dialogue”.

One grim graphic that appeared in late 2005 in the Hartford Courant tells it all: the Mexican workers making a $38 UConn sweatshirt earned a mere 18 cents, while the University pocketed al- most $2.50. Could this contrast have been

any starker ten years earlier, when the “sweat- shop” story broke big? How, then, did the apparel TNCs vault into the upper echelons of “responsible” corporations?

Government-backed “human rights” re- porting may also be blamed for not attending to the failures of “self-regulation” put in place by CSR. The Sialkot soccer ball child labor scan- dal illustrates the shortcomings of depending on this sort of monitoring. When the contro- versy arose, the World Federation of Football Clubs (FIFA, the French acronym) had imme- diately sought advice from the International Confederation of Free Trade Unions (now the International Trade Union Confederation). Within months, a tough set of standards (in- cluding bargaining rights for workers) was de- veloped for TNCs that wanted to continue us- ing the FIFA stamp of approval (vitally impor- tant, as it made the balls “regulation” for match play). The global sportswear brands, however,

The key problem, of course, is that workers in the developing world see almost no examples of unions actually delivering some benefits or higher wages.



94 • New Labor Forum J. Ballinger

formulated a much less onerous intervention which FIFA ultimately adopted, after Adidas, Nike, et al. pointed out how lucrative the “rep- lica jersey” market was for football club own- ers. Monitoring—such as it was—would be funded primarily through government grants, yet it included no provision for labor law en- forcement by authorities in Pakistan. Instead, there were “international” inspection teams set up under the now-common model of “social audit” self-regulation.

The monitoring scheme cost millions and produced no direct gains for workers. Realisti- cally, only higher wages through collective bar- gaining would have had a serious impact on the region’s child labor problem. This was what the international outcry demanded, and it was the path that the FIFA had initially embarked upon. It must be said that thousands of chil- dren benefited from the Sialkot Project (SP) inasmuch as they gained access to education opportunities, many for the first time.

In mid-2006, Nike ended a sourc- ing agreement with Sialkot’s leading pro- ducer, Saga Sports—a move that threat- ened the jobs of thousands of young Pa- kistanis. As a result, the work was shifted back in less than a year’s time. Nike’s explanation for pulling the work included evidence that even the most basic elimination-of-child-labor provi- sion of the SP code had been traduced, despite 8 years of ILO, UNICEF, Save the Children (etc.) “monitoring.” This is a stellar example of “re-defining success.” First, the demands of the international human rights community (for worker empowerment) were turned aside in favor of a monitoring scheme; soon thereafter, educa-

tional outreach was (implicitly, at least) substi- tuted for the difficult and assuredly more costly progress in workplace relations—collective bar- gaining.


INDUSTRY “COMPLIANCE” HAS BECOME A REALLY BIGbusiness now, but what an infernally vague and opaque system! Between 1996 and 1999, sweat-reliant businesses bought time— while concocting standards and oversight pro- cesses. Since 2001, armies of these companies’ consultants have been plaintively arguing at meetings around the globe that there were too many standards and processes to reasonably guide suppliers. Some business observers see the “compliance” house of cards about to

tumble. A leading journal for purchasing and supply-management professionals put it this way:

If Nike paid workers 75 cents more per pair of shoes [to fix problems that workers have been complaining about] the cost to Nike would be $210 million a year, compared to the much lower CSR cost of less than $20 million.



No Sweat? New Labor Forum • 95

A recent report found ethical buying codes have done little to improve factory condi- tions overseas. For a decade now, compa- nies have relied on these codes and on-site audits, safe in the belief they are doing the best they can to improve conditions for workers in their supply chains. But re- search published in October threatens to strip firms of this refuge, exposing the re- ality that more must be done if they are to make a genuine difference (Supply Man- agement April 2007).

Not to worry, is the attitude that comes from the CSR “industry.” It sees nothing but more-profitable times ahead: “CSR shifted from the periphery to the mainstream in 2005; in 2006 it dominated headlines and catapulted into the heart of our collective consciousness” (CSRwire).

Is it possible to win decent wages for gar- ment and shoe workers without unions? Ac- cording to Bud Konheim, garment executive,

interviewed in 1997, “In this industry, the only reason to change is because someone has got a great cattle prod that keeps jabbing you in the

rear end.” People in the industry acknowledge, when they’re honest, that the “default position” of low-skilled manufacturing is exploitation and vicious cost-cutting; it’s in the DNA of the outsourcing model. Nike board member and Nobel laureate, Michael Spence, once told a group of Singapore business students that TNCs had to be “ruthless” about outsourcing.

The very fact that workers in Vietnam overrode the government-controlled trade union in staging several wildcat strikes at Nike-producing factories in 2006-7 speaks vol- umes: these workers aren’t getting paid enough and are demanding attention that CSR in any of its various forms is not going to provide. A worker I spoke with in December 2007 actu- ally wept as she described attempts to make ends meet on the salary she received at the Nike-producing factory in Cu Chi, Vietnam. And she was a “team leader” with 12 years se- niority!

Dr. Liu Kaiman, of the Institute of Con- temporary Observation in Shenzhen, China said, “The retailers and their sup- pliers are playing an elaborate game. They only want to reassure customers, not to improve conditions.”

The CSR cost for Nike is about $15 million to $20 million a year, merely for the CSR staff and expenses, to go to “sustainability” and “triple bottom line” (financial, social, and environmental as- sessments) meetings all over the world and to pay for several hundred third- party factory audits. They must have two or three Nike people at every meeting; that’s part of the CSR game and how a

company shows “real commitment.” My re- search shows that about 75 cents per pair of shoes to the worker would be needed to fix

Searching through the vast output of CSR-related initiatives . . . two things jump out: the denigration of the idea of “union as solution,” and a small collection of promising ideas.



96 • New Labor Forum J. Ballinger

problems that workers have been complaining about since the 1980s. That is roughly 80% more to workers, or $1.80 on a $70 pair of shoes

at Foot Locker. If Nike, instead, paid workers that 75 cents more per pair of shoes, the cost to Nike would be $210 million a year compared to the much lower CSR cost of less than $20 million.


SEARCHING THROUGH THE VAST OUTPUT OF CSR-related initiatives, proposals, and commen- tary, two things jump out: the denigration of the idea of “union as solution,” and a small col- lection of promising ideas. Foremost among the latter is the suggestion by CUNY (Zicklin) busi- ness professor, Prakash Sethi, that multination- als and their contractors need to make “resti- tution for years and years of expropriation of wages of workers who are at the bottom of the food chain and are least able to defend them-

selves.” This simple idea could usher in a para- digm-shifting chain reaction. The big buyers would be moved beyond accepting blame to

accepting responsibility—including fi- nancial liability—and courageous work- ers who stood up to abusive bosses would (better late than never) win cash-in-hand payments for tens of thousands. Most im- portant, perhaps, would be the resultant pressure on recalcitrant “host” govern- ments that failed to protect workers in the first place.

Another idea worthy of further ex- ploration is the approach of the Worker Rights Consortium (WRC) [full disclo- sure—I’m on board of advisors] the only monitoring operation of any size that has remained out of the grasp of corporate overseers. WRC has propounded a plan that would steer university bookstores in the direction of “better” garment shops. Though students have won agreements

at more than thirty schools, it is difficult for the WRC to recommend even a small number of “better” suppliers—mostly due to the lack of real collective bargaining.

Unsurprisingly, a reticence toward unions prevails at the Fair Labor Association (what Bill Clinton’s AIP morphed into), another monitor- ing organization with colleges and universities as dues-paying members, but with major fund- ing from big apparel brands. Choosing his words carefully, Auret van Heerden, president and CEO of the FLA, denounced the WRC’s idea, “If they do choose to form a trade union, that usually involves a long process of recruit- ing members and building an organization. The negotiation and signing of a collective agree- ment is also a process that cannot be reduced to a requirement.” The Designated Suppliers

Though students have won agreements at more than thirty schools, it is difficult for the Worker Rights Consortium to recommend even a small number of “better” suppliers—mostly due to the lack of real collective bargaining.



No Sweat? New Labor Forum • 97

Program would be imposed upon suppliers “in an undemocratic way without a minimum of consultation,” according to van Heerden (dubbed a “Lion for Workers’ Rights” by the CSR-friendly BusinessWeek magazine in 2006).

The key problem, of course, is that work- ers in the developing world see almost no ex- amples of unions actually delivering some ben- efits or higher wages. They are reluctant to or- ganize, and rightly so. Moreover, while suppli- ers may claim to buyers that the workers’ asso- ciational rights are respected, they have done everything in their considerable collective power to thwart actual bargaining. Adding in- sult to injury, examples abound of union orga- nizing leading to factory closings. Recently, in Thailand and the Dominican Republic work- ers did win reasonable gains, only to see the factories closed.

Minimally, fixing Corporate Social Resposibility programs should start with firing all the “social audit” parasites. Tracking changes in worker-to-toilet ratios and compliance with fire-extinguisher-placement guidelines should

move to the back burner for a while. Instead, emphasis should be placed on empowering lo- cal communities working in and living near supplier factories. These efforts should include

getting all suppliers to write to the national gov- ernments in the countries they source from.

These letters should ask:

• Worker Rights—Has the country signed ILO convention 81 (Labor Inspection)? If so, when was the last time a “convention 81” report was sent to Geneva? (The num- ber is quite paltry, I assure you.) How many labor inspectors? How many factory visits last year? Number of violations found. Number of prosecutions started. Number of back pay awards.

• Environmental—Inspection statistics (fac- tories visited, citations, types of hazardous waste). Plus, bureaucratic chain-of-com- mand: names of responsible local officials and who s/he reports to.

These results should be posted on your “CSR” website in English and the local lan- guages. This will have the effect of encourag- ing real regulation (instead of corporate “self- regulation”). First, local journalists and legal-

aid NGOs will pounce on the infor- mation. Next, laggard “international agencies” may feel the need to do something besides planning for the next tri-partite conference. Finally— and most importantly—workers and people who live near the factories will be emboldened by all the attention and fashion their own self-help solu- tions.

Several years ago, at a human rights conference at Tufts University,

I challenged a woman from Boston Consulting Group who had just talked about self-regula- tion, saying that I had not observed any mean- ingful change amongst bad TNCs. Her reply

Minimally, fixing Corporate Social Resposibility should [emphasize the] empowering of local communities working in and living near supplier factories.



98 • New Labor Forum J. Ballinger

was something to the effect that, “we don’t know yet what a bad company is.” In other words, the metrics had not been fully fleshed out and more study was called for. Here I was with fifteen years of documentation on sweat- shop abuses, but I was supposed to accept that it required more study. Well, of course, that’s what consultants get paid for—studies! Cer- tainly not for fixing anything. Then, you’re just putting yourself out of a job.

I saw something that worked in Indone- sia. To my surprise, pressure on Nike ended up pressuring the government of Indonesia; the minimum wage was raised by 20–30% year af-

ter year between 1991–96. That was roughly the time frame during which their Nike shoe pro- duction there had drawn international atten- tion to the miserable—criminal, almost—mini- mum wage. Strikes at shoe factories (apparel, too) drew lots of attention and the courageous strike leaders were often fired. Nike would call them “troublemakers” in the local press and, to this day, this company which has what is called the “gold standard” in CSR has never paid res- titution or apologized to any of these workers who were doing nothing more than pointing out the law-breaking ways of Nike’s partners- in-production.

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