Faiez Hassan Seyal | June 2002

Introduction:

Like ISO[1] 9000 and ISO 14000, now the fever for SA-8000 certification is catching up corporate sector in Pakistan. The major brands[2] in the west and in the North America are exerting tremendous pressures on their southeastern suppliers to get their manufacturing facilities SA-8000 certification. Failing to comply with SA-8000 and to achieve this certification till the deadline given by these major brands would put restrictions to buy from these manufacturers. Although deadlines for SA-8000 certification varies from industry to industry and company to company, it is generally believed that it is June 2004. There are growing apprehensions on the part of corporate managers in the textile, surgical and sporting goods[3] industries generally in third-world countries and particularly in Pakistan that SA-8000 is a new weapon after the ISO 9000 (i.e. Quality Management Standards) and ISO 14000 (i.e. Environmental Management Standards) that the West has especially developed and is enforcing to make it extremely difficult for the manufacturers and exporters in the southeast region of the world to stay competitive in the globalized marketplace.

The reasons for these apprehensions are many. However, the major reason for this resistance is the increased 1) cost of labor and 2) increased fixed cost associated with the implementation of SA-8000. As the primary reason for the lower cost advantage which the south-eastern manufacturers and exporters have been enjoying over their western counterparts is due to the extensive use of child labor, forced labour, unjust labour practices, pathetic working conditions, and workplace safety and health hazards. This paper provides a “just” analysis of the situation.

Unfair and Unjust Labor Practices – A Real Story[4]:

Oregon based Nike, Inc., is the world’s largest designer and marketer of athletic shoes. Co-founded formally in 1963 as Blue Ribbon Sports by Phil Knight and Coach Bill Bowerman with contribution of US $ 500 by each of co-founders, Nike’s total revenues were soaring at above US $ 9.5 billion by year 2000. In the same year, it was employing around 20,000 people directly, and about half a million people indirectly in 565 contract factories in 46 countries around the world.

Two factors are credited for this great success. Firstly, the ability of Nike to conduct extensive research in biomechanics and physiology in its Sports Research Laboratory and then develop cutting-edge athletic shoes based on the finding of this research. Secondly, the manufacturing of shoes through a network of 565 contract factories in 46 countries mainly in southeast Asia to reap the benefits of lower wage rates and excess to raw material suppliers.

In 2000, Although Nike was the largest athletic footwear company in the world; it never manufactured shoes in significant numbers besides manufacturing prototypes. As there was no such thing like a typical Nike Plant, therefore it was difficult to access the work practices adopted in these factories. However, a factory operated by a Korean subcontractor in Vietnam provided the following glimpses about the work practices and the work conditions within Nike’s subcontracted factories.

• Ninety percent of the workers were women between the ages of 18 to 24.
• These women were paid a wage of 14 cents per hour.
• One worker described the work as being dirty, dangerous and difficult.
• In the chemical section, use of various hazardous chemicals and hot ovens and the resulting chemical fumes caused eye, skin, and throat irritations, damage to liver and kidneys, nausea, anorexia, and reproductive heath hazards through inhalation.
• In the stitching section, over a thousand women stitchers worked on a single floor sewing various parts of the shoes under extremely difficult conditions. Workers who did not meet the production targets were denied of bonus and not meeting the production targets for three times resulted in termination of the worker. Workers were forced to work overtime to meet the production targets without the overtime pay. Supervisors were strict and frequently blamed the workers for excessive talking and spending too much time in toilets. Hitting and slapping of slow workers by supervisors were common practices. Workers guilty of discipline violations were forced to stand outside the factory for long periods in burning heat.
• In the assembly section, women worked side by side to assemble various parts of the shoes. A strong smell of solvent was prominent in the assembly area. Ceiling fans were ineffective.

Although the criticism against Nike’s global inhumane work practices had started by early 1990s with various reports and campaigns by Harper’s magazine, The Made in the USA Foundation backed by American unions, CBS News, Washington Post, etc., it was 1996 when a story in Life magazine documenting the use of child labour producing soccer balls for Nike and Adidas in one of the subcontractor’s factories in Pakistan (in the city of Sialkot) and showing the photographs of small children sitting in dirt and carefully stitching the pieces of soccer balls followed by the CBS News program 48 Hours featuring low wage rate, extensive overtime, inhumane work conditions and physical abuse of workers in Nike’s factories in Vietnam jeopardized the public and brand image of Nike that its founders worked so hard to build.

Throughout in the early years of this campaign, Nike’s management had been maintaining that the labor practices of its foreign subcontractors were not their responsibility. However, as the campaign gathered momentum, Nike’s top management realized that they had to take some actions to avoid further damage to its reputation. In response, they drafted their company’s first code of conduct in 1992 making it mandatory for all of its subcontractors to honor all of their legal, labor and environmental obligations, otherwise Nike would cancel its contract with them. In 1994, Nike appointed independent auditors to monitor the compliance of the code of conduct by its subcontractors. In 1996, Nike established a new Labor Practices Department. Over the next few years, Nike continued working with its subcontractors to improve their labor practices and working conditions. In 1998, Nike established its Corporate Responsibility Division and announced publicly to increase the minimum age in its shoe factories to 18 and its apparel factories to 16. It also promised to achieve OSHA standards for indoor air quality in all its factories.

Besides all these initiatives in the area of fair labor practices that Nike introduced, the public awareness on the issue of social accountability that was resulted due to the earlier campaigns, which started in early 1990s could not put to a halt. This mass campaign against imperialism won the global attention and support of various human rights activist and labour union associations. Only in the USA, Apparel Industry Partnership (AIP), Fair Labor Association (FLA) and Worker Rights Consortium (WRC) are just a few examples of various statewide initiatives to promote fair labor practices and social accountability.

Globally, Social Accountability International (SAI) assembled an international multi-disciplinary task force to develop Social Accountability 8000 (SA-8000^R) in 1996. SA-8000^R is a voluntary standard for workplaces based on International Labour Organization (ILO) and other human rights conventions. Its independent third-party verification and assessment method uses many key elements from the globally accepted ISO-9000 series of quality management standards.

SA-8000^R and Islam:

When I was requested to comment on SA-8000^R and its implications on the local industry, being a practising Muslim, the only test available to me to check the integrity of SA-8000^R was to see as to how it related with the Divine Truth. In the following section, I am relating each clause of the SA-8000^R with the relevant teachings of the Islam as I am a strong believer that nothing could be true, good and final unless it comes through or relates with the divine truth.

Conclusion:

Well, by now you must have formed your own opinion about SA-8000^R. In my case, when I first reviewed the Guidance document for SA-8000^R in 1999, my immediate response was that why it has taken the world so long to acknowledge the basic dignity of man and to realize fundamental human values and rights in the workplace? Something that all the religions of the world share regardless of their other differences. Something that the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of Human Rights on December 10, 1948. To be honest, I could not understand the very basis of the criticism of SA-8000, except that those who criticize it are aloof of the teachings of their own religion or may be their vested interests have overshadowed their humanness. Or may be this criticism is mainly due to the fact that it is coming and enforced by the West and our false ego does not permit us to accept anything that comes from the West. For this type, I have few comments to make. Firstly, remember that even though that these factories were subcontractors to major global brands, these factories were owned and managed by local businessmen. Who had asked these entrepreneurs to exploit their own masses? Definitely, not Americans and Europeans. Even if it was true that Americans and European businessmen were exploiting our masses, then what were our businessmen doing? If they were not sincere to their own people, why to expect others to be sincere to your countrymen? And by the way, when American and western public as well as various human rights agencies and labor unions were protesting against the imperialism of their own business houses and boycotting their products for they could not see the exploitation of poors in south-eastern countries, what did the public, human right agencies and labor unions in these countries did? How could they bear what was unbearable for the outsiders?

At the end, I would like to request a just and unbiased self-analysis before you label me as a western and/or American agent. Remember that our biases should not let us deviate from accepting and practising the truth, no matter where it comes from, as it is one of the traits of a believer narrated by the Holy Prophet (PBUH):

“The word of wisdom is the lost property of the believer, so wherever he finds it he has a better right to it.” (Tirmidhi)

 

Footnotes:

[1] International Standard Organization (ISO) is an international organization based in Geneva, Switzerland responsible for the design, development and implementation of international standards in the workplace such as ISO 9000 for quality management, ISO 14000 for environmental management and ISO 17000 for health and safety management.

[2] It is worthwhile to mention that major global brands in apparel industry like Gap, Polo, Levis’, Wrangler, Dockers, and in the sports industry like Nike and Adidas don’t own their own manufacturing facilities but rather get it manufactured through third-party manufacturers mostly in third-world countries, where they could reap the advantages of cheap labor. Majority of these manufacturing facilities are legally bound to manufacture only for and supply solely to their business associates in North America and the West. In many manufacturing facilities, I personally visited in Pakistan, even the rejected items are burnt by the international buyer and is not allowed to be sold in the local markets. In one of a major denim manufacturers in Pakistan, producing and supplying 100 percent of its production to one major Jeans brands, the average purchase price for a denim jean was about US $ 3.50, whereas the same was sold in the US market for about US $ 39.95.

[3] These three primarily export-oriented industries are hard-hit by SA-8000 like earlier they were hit by ISO-9000 and ISO-14000 series of standards. In Pakistan, apparel manufacturing industry, which manufactures for and exports to major global brands is geographically spread all over Pakistan including Karachi, Lahore, Raiwind and Faislalabad. Whereas sporting goods industry which is primarily involved in the manufacturing and exporting of various sport equipments including soccer, cricket and volley balls, cricket bats, hockey sticks, etc. concentrates in the city of Sialkot. Also the city of Sialkot is known worldwide for exports of surgical instruments to major brands in the USA, Europe and Southeast.

[4] This section of the article is based on a case study “Nike’s Dispute with the University of Oregon”, by Rebecca J. Morris and Anne T. Lawrence. All rights reserved jointly to the authors and the North American Case Research Association. Copyright © 2001 by the Case Research Journal and Rebecca J. Morris and Anne T. Lawrence.

[5] © SAI 2001. SAI (Social Accountability International) is an international organization based in Switzerland. No copying without permission of SAI except as permitted by Copyright Laws. SA8000® is a registered trademark of Social Accountability International.

[6] Including Holy Qur’an – the divine book of Muslims as well as the sayings of the Prophet Muhammad^PBUH, which forms the integral part of Islamic teachings as revealed by Allah Himself in the Holy Qur’an: “And obey God and the Apostle; that ye may obtain mercy” (3: 132) and “Obey God and His Apostle: But if they turn back, God loveth not those who reject Faith.” (3: 32). The references in parenthesis with numbers inside are from the Holy Qur’an’s translation by Abdullah Yusufali. The digits before the colon are the Sura or the chapter number and the digits after the colon represents the verse number. All other references are sayings of the Prophet Muhammad^PBUH, taken from different editions of authentic Hadith sources as mentioned in parenthesis.

 

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 Annex A: (Management Systems)

9. 9. Management Systems

       Criteria:

       Policy

9.1 Top management shall define the company’s policy for social accountability and labour conditions to ensure that it:

a) includes a commitment to conform to all requirements of this standard;

b) includes a commitment to comply with national and other applicable law, other requirements to which the company subscribes and to respect the international instruments and their interpretation (as listed in Section II);

c) includes a commitment to continual improvement;

d) is effectively documented, implemented, maintained, communicated and is accessible in a comprehensible form to all personnel, including, directors, executives, management, supervisors, and staff, whether directly employed, contracted or otherwise representing the company;

e) is publicly available.

 

       Management Review

9.2   Top management shall periodically review the adequacy, suitability, and continuing effectiveness of the company’s policy, procedures and performance results vis-a-vis the requirements of this standard and other requirements to which the company subscribes.  System amendments and improvements shall be implemented where appropriate.

 

       Company Representatives

9.3   The company shall appoint a senior management representative who, irrespective of other responsibilities, shall ensure that the requirements of this standard are met.

 

9.4   The company shall provide for non‑management personnel to choose a representative from their own group to facilitate communication with senior management on matters related to this standard.

 

       Planning and Implementation

9.5   The company shall ensure that the requirements of this standard are understood and implemented at all levels of the organisation; methods shall include, but are not limited to:

 

1. a) clear definition of roles, responsibilities, and authority;
2. b) training of new and/or temporary employees upon hiring;
3. c) periodic training and awareness programs for existing employees;
4. d) continuous monitoring of activities and results to demonstrate the effectiveness of systems implemented to meet the company’s policy and the requirements of this standard.

 

       Control of Suppliers/Subcontractors and Sub-Suppliers

9.6   The company shall establish and maintain appropriate procedures to evaluate and select suppliers/subcontractors (and, where appropriate, sub-suppliers) based on their ability to meet the requirements of this standard.

 

9.7   The company shall maintain appropriate records of suppliers/subcontractors (and, where appropriate, sub-suppliers’) commitments to social accountability, including, but not limited to, the written commitment of those organizations to:

 

a) conform to all requirements of this standard (including this clause);

b) participate in the company’s monitoring activities as requested;

c) promptly implement remedial and corrective action to address any nonconformance identified against the requirements of this standard;

d) promptly and completely inform the company of any and all relevant business relationship(s) with other suppliers/subcontractors and sub-suppliers.

 

9.8   The company shall maintain reasonable evidence that the requirements of this standard are being met by suppliers and subcontractors.

 

9.9  In addition to the requirements of Sections 9.6 and 9.7 above, where the company receives, handles or promotes goods and/or services from suppliers/subcontractors or sub-suppliers who are classified as homeworkers, the company shall take special steps to ensure that such homeworkers are afforded a similar level of protection as would be afforded to directly employed personnel under the requirements of this standard.  Such special steps shall include but not be limited to:

(a) establishing legally binding, written purchasing contracts requiring conformance to minimum criteria (in accordance with the requirements of this standard);

(b) ensuring that the requirements of the written purchasing contract are understood and implemented by homeworkers and all other parties involved in the purchasing contract;

(c) maintaining, on the company premises, comprehensive records detailing the identities of homeworkers; the quantities of goods produced/services provided and/or hours worked by each homeworker;

(d) frequent announced and unannounced monitoring activities to verify compliance with the terms of the written purchasing contract.

 

       Addressing Concerns and Taking Corrective Action

9.10 The company shall investigate, address, and respond to the concerns of employees and other interested parties with regard to conformance/nonconformance with the company’s policy and/or the requirements of this standard; the company shall refrain from disciplining, dismissing or otherwise discriminating against any employee for providing information concerning observance of the standard.

 

9.11   The company shall implement remedial and corrective action and allocate adequate resources appropriate to the nature and severity of any nonconformance identified against the company’s policy and/or the requirements of the standard.

 

       Outside Communication

9.12   The company shall establish and maintain procedures to communicate regularly to all interested parties data and other information regarding performance against the requirements of this document, including, but not limited to, the results of management reviews and monitoring activities.

 

       Access for Verification

9.13   Where required by contract, the company shall provide reasonable information and access to interested parties seeking to verify conformance to the requirements of this standard; where further required by contract, similar information and access shall also be afforded by the company’s suppliers and subcontractors through the incorporation of such a requirement in the company’s purchasing contracts.

 

       Records

9.14   The company shall maintain appropriate records to demonstrate conformance to the requirements of this standard.

 

 

Annex B: (Purpose and Scope) 

1. Purpose And Scope

This standard specifies requirements for social accountability to enable a company to:

a) develop, maintain, and enforce policies and procedures in order to manage those issues which it can control or influence;

b) demonstrate to interested parties that policies, procedures and practices are in conformity with the requirements of this standard.

The requirements of this standard shall apply universally with regard to geographic location, industry sector and company size.

 

Note:  Readers are advised to consult the SA8000 Guidance Document for interpretative guidance with respect to this standard.

 

Annex C: (Definitions)

Definitions

 

1. Definition of company: The entirety of any organization or business entity responsible for implementing the requirements of this standard, including all personnel (i.e., directors, executives, management, supervisors, and non‑management staff, whether directly employed, contracted or otherwise representing the company).
2. Definition of supplier/subcontractor: A business entity which provides the company with goods and/or services integral to, and utilized in/for, the production of the company’s goods and/or services.
3. Definition of sub-supplier: A business entity in the supply chain which, directly or indirectly, provides the supplier with goods and/or services integral to, and utilized in/for, the production of the supplier’s and/or company’s goods and/or services.
4. Definition of remedial action: Action taken to make amends to a worker or former employee for a previous violation of a worker’s rights as covered by SA8000.
5. Definition of corrective action: The implementation of a systemic change or solution to ensure an immediate and ongoing remedy to a nonconformance.
6. Definition of interested party: Individual or group concerned with or affected by the social performance of the company.
7. Definition of child: Any person less than 15 years of age, unless local minimum age law stipulates a higher age for work or mandatory schooling, in which case the higher age would apply. If, however, local minimum age law is set at 14 years of age in accordance with developing‑country exceptions under ILO Convention 138, the lower age will apply.
8. Definition of young worker: Any worker over the age of a child as defined above and under the age of 18.
9. Definition of child labour: Any work by a child younger than the age(s) specified in the above definition of a child, except as provided for by ILO Recommendation 146.
10. Definition of forced labour: All work or service that is extracted from any person under the menace of any penalty for which said person has not offered him/herself voluntarily or for which such work or service is demanded as a means of repayment of debt.
11. Definition of remediation of children: All necessary support and actions to ensure the safety, health, education, and development of children who have been subjected to child labour, as defined above, and are dismissed.
12. Definition of homeworker: A person who carries out work for a company under direct or indirect contract, other than on a company’s premises, for remuneration, which results in the provision of a product or service as specified by the employer, irrespective of who supplies the equipment, materials or other inputs used.