Abstract
Apparel and agriculture are two sectors historically marked by extreme levels of exclusion and abuse of worker rights. Global trade regimes have protected developed market economies at the expense of developing countries, and lead firm consolidation in agriculture and apparel supply chains has created downward pressure on wages and working conditions. However, it is precisely in these more precarious sectors of the global economy that an innovative strategy of binding cost sharing accords is emerging. This dynamic of the sourcing squeeze and a binding, cost-sharing accord to address the problem of exclusion of worker’s rights is illustrated by the Accord on Fire and Building Safety in Bangladesh, which is the focus of this article. The Bangladesh case is then briefly compared to working conditions in agriculture and the Fair Food Program in the United States. This article argues that these efforts have been more successful than other state and non-state initiatives because they bind lead firms in supply chains to share in the cost of better conditions of labour.
Introduction
Despite more than two decades of private voluntary approaches to address workers’ rights abuses in supply chains, workers in the lower production tiers continue to face poor working conditions and chronic violations of their rights (Anner, 2012; Esbenshade, 2004; Jenkins, 2002; Locke, 2013; Seidman, 2007). Bangladesh has been emblematic of low wages, poor working conditions, union-avoidance, and a series of mass fatality disasters in garment factories, culminating in the collapse of Rana Plaza in 2013, in which 1,134 garment workers lost their lives. In the years that followed, pressure from multiple sources have been put on Bangladesh to address violations. Yet, this article finds that gains have been severely limited with regards to wages, overtime hours, and work intensity, due in part to the sourcing practices of the brands and retailers that sit at the top of global supply chains. A partial exception is in the area of associational rights, where, in the aftermath of Rana Plaza, pressure from the European Union, the United States, and international organizations resulted in minor pro-union labour reforms. These reforms, combined with the tenacity of workers and their organizing efforts, resulted in an increase in the number of recognized unions. However, in recent years, union growth has once again stagnated, indicating the need for continued international pressure and for further strengthening of freedom of association rights.
This article finds one area where gains for workers have been dramatic: building safety. This is largely the result of an unprecedented binding agreement, the Accord on Fire and Building Safety in Bangladesh. The Accord, which imposes constraints and obligations on global firms that are absent from traditional voluntary corporate social responsibility (CSR) schemes, has overseen a massive programme of safety renovations and upgrades. No doubt, the Accord has faced challenges. One area of concern has been substantial delays in the full remediation of all Accord factories, which is compounded by the fact that new factories join the Accord on a regular basis as buyers expand their pool of supplier factories in the country. Yet, the programme has delivered an improved margin of safety for more than 2.5 million garment workers and upgrades that have eliminated more than 97,000 identified hazards across more than 1,600 covered factories.
Through a similar dynamic, farmworkers in the United States have forced lead firms in agriculture—fast food companies, such as Taco Bell and McDonalds, and supermarket chains, such as Whole Food and Walmart—to pay a ‘fair food premium’ on every pound of covered produce that they purchase from participating growers. The programme began with tomato harvesting, where workers were paid by Taco Bell a penny more per pound harvested. Today, the amount paid per pound to workers varies depending on the agricultural product. In the case of tomato workers, the premium resulted in a 50 per cent to 75 per cent increase in workers’ wages (Drainville, 2008).
Why have these initiatives succeeded where others have failed? This article argues that four elements are crucial: (a) buyers in supply chains (not just immediate employers) are directly involved in negotiating accords with labours; (b) these accords are legally binding; (c) buyers share the cost of social responsibility (d) accords are transparently co-governed with labour’s involvement. In sum, sustainable socially responsible production in global supply chains requires that the buyers—who control and benefit economically from that production—are legally bound to share in the cost of socially responsible production.
In the sections that follow, this article first explores the causes for persistent poor working conditions and systematic violations of workers’ rights in supply chains. Then, the conditions that gave rise to the Bangladesh Accord will be examined, as well as how the Accord functions and what has been its impact. Next, the article explores the US agricultural workers’ accord. The final section concludes.
Power Imbalances and Workers’ Rights in Global Supply Chains
Contemporary understanding of global supply chains goes back to the work of Hopkins and Wallerstein (1986) who referred to commodity chains in the world economy as entailing a ‘world-scale division of labor’ that began prior to 1800. In addition, the authors note the potential for ‘inequalities in the organizational properties of different sets of operations’ (ibid, p. 162). Building on this concept, Gereffi, Korzeniewicz, and Korzeniewic (1994, p. 2) refer to Global Commodity Chains (GCCs), which they define as ‘[s]ets of interorganizational networks clustered around one commodity or product, linking households, enterprises, and states to one another within the world-economy’. Their concept also deals with the dynamics of spatial inequality. As noted by Bair (2009), in the GCC approach, the focus of analysis shifts from the state to the role of firms as the organizing agents of capitalism.
Scholars of commodity chains focused much of their attention on supply chain governance structures. They were particularly interested in the firms in supply chains that exercised the greatest power. Gereffi argued that the ‘buyer’ (brand apparel companies and retailers) had the greatest power in the apparel sector (Gereffi, 1994). For some, agricultural production at times has had two competing poles of power: large agricultural corporations such as Chiquita and powerful supermarket chains such as Walmart (Riisgaard & Hammer, 2011). Large multinational corporations (MNCs) have increasingly monopolized the purchase of food products from myriad local farmers (Hough, 2012). This has resulted in a squeeze on prices paid by retailers to farmers and by farmers to workers (Oxfam, 2004).
In apparel, the structures of these power imbalances are shaped by firm power and strategy and also by state policies. Beginning in the 1990s, changes in the retail industry contributed to the dramatic consolidation of mass merchandizers and thus the consolidation of buyer leverage at the top of apparel supply chains (Abernathy, Dunlop, Hammond, & Weil, 1999; Bonacich & Appelbaum, 2000), a trend that continues to this day. Mass merchandizers were able to displace smaller retail outlets by reducing margins and focusing on making their profits by selling very large volumes of products. In the late 1990s and early 2000s, the supply chain power imbalance escalated further with changing trade rules that dramatically liberalized trade in apparel, while also expanding trade with major supplier countries (Gereffi & Frederick, 2010). Trade liberalization was the result of the 1995–2004 World Trade Organization (WTO) phase out of the quota-based system. During this period, China entered the WTO, bringing thousands of new, highly efficient suppliers and millions of new workers into apparel supply chains. In the aftermath, there was yet another major restructuring of the global apparel industry as production flowed to China. In the process, those countries seeking to remain in the sector were forced to push down production costs.
Power imbalances between buyers and suppliers have always been a significant characteristic of garment supply chains (Gereffi, 1994). This article finds that the consolidation of buyers and the dispersion of suppliers resulting from changing trade rules has contributed to an increased power imbalance between buyers and suppliers. This imbalance has resulted in two sourcing trends in apparel global supply chains. First, there is a ‘price squeeze’ in which buyers constantly seek to lower the price paid to the suppliers who make their garments. Second, we find a ‘lead time squeeze’ in which buyers demand supplier factories produce goods in increasingly shorter periods (Anner, 2018).
The impact of these changes on workers has been profound. As noted by Distelhorst and Locke (2018), most apparel productions are now located in countries with the highest level of violations of freedom of association. Research by Anner, Bair, and Blasi (2013) illustrates how this trend of decline in respect for workers’ rights in the 20 top apparel exporting countries corresponds to a decline in the real dollar price paid of apparel imported into the United States. Women and girls, in particular, are adversely affected by these trends in global supply chains (Barrientos, Dolan, & Tallontire, 2003).
The sourcing squeeze also affects wages; one study found that in all major apparel exporting countries, prevailing wages fail to cover even 50 per cent of a living wage (WRC, 2013). Indeed, research by the International Labour Organization (ILO) concluded that in major apparel exporting countries, including Cambodia, Pakistan, Thailand, Indonesia, India, and the Philippines, between 25 per cent and 53 per cent of factories failed to even pay the legal minimum wage (ILO, 2016). Here again, the cause for the continuous need to cut costs, in this case, by violating wage laws, can be tied to a sourcing squeeze. A separate survey by the ILO found that 52 per cent of supplier factories reported having accepted orders whose price did not allow them to cover their production costs (ILO, 2017).
The price squeeze in global garment supply chains has also impacted building safety. Long before Rana Plaza, Michael Piore emphasized that supplier factories are forced to keep fixed costs low—notably, building overhead—because the industry faces significant fluctuations in order volume and, thus, income. Piore (1997, p. 137) notes, ‘[t]o minimize that [building] cost, the employer will seek out cheap—that is, substandard—factory housing…The attempt to reduce rent paid per worker is the chief cause of congestion in sweatshops, affecting the way in which material inventories, supplies, equipment, and work-in-progress block aisles and exits. It is also the source of unhealthy and dangerous conditions (poor wiring and ventilation, unsanitary or non-existent bathrooms, fire hazards)’.
Today, in much of the research on workers’ rights, wages, and building safety, Bangladesh often emerges as the most challenging case. Hence, if we can understand the causes of the problems in Bangladesh, as well as explore what has and what has not worked in the case of Bangladesh, we can develop not only a clearer picture of Bangladesh, but also a better sense of which approaches might work in other countries facing similar challenges.
The Garment Sector in Bangladesh
Since the 1980s, the ready-made garment (RMG) sector has been a cornerstone of the Bangladesh economy. In 2015, the country exported US$26.6 billion in garments. That same year, the sector accounted for 76.33 per cent of Bangladesh’s exports in goods and services and 13.64 per cent of its gross domestic product. 1 More than 4,000 supplier factories and 4 million direct workers make their living off the sector (Anner & Bair, 2016). There are also many millions more who are indirect beneficiaries of the sector. Thus, the sustainability of the RMG sector has a profound impact on the overall economic conditions in the country and the well-being of millions of people.
To understand Bangladesh’s growth in the global garment export sector, it is helpful to look at its top exports to the United States and European Union in comparative perspective. Bangladesh’s top export products to the United States are men’s and boy’s cotton trousers. If we look at the top apparel exporting countries to the United States, and we take price paid per square metre in real dollars, we see two trends. First, in general, the price point comes down. Second, Bangladesh comes down to the lowest level. A similar dynamic can be observed with respect to t-shirts, which account for the largest percentage of garment exports from Bangladesh to Europe (EU-28). In 2016, Bangladesh exported more than 250 million kilograms of t-shirts per year, far exceeding the combined amount of t-shirt exports from the second, third, and fourth top exporters (China, India, and Turkey). It did this by providing the lowest competitive price in the international market. Therefore, there was overall a real dollar price decline during this period, whereby the average nominal euro-per-kilogram price of imported t-shirts into EU-28 countries dropped from EUR 11.21 to EU 10.63.
If we look at the nominal prices paid since Rana Plaza for trousers exported to the United States, we find a 13 per cent decline, which, as argued here, is the result of a price squeeze by lead firms. Alternative arguments would be that the decline in price is the result of exchange rate fluctuations or the price of cotton. No doubt, under certain conditions, these factors may contribute to price fluctuations. But this is not the case here. Regarding exchange rates, between 2013 and 2017, the rate of devaluation was only 3.8 per cent, and the local currency (Taka) component is only a small fraction of total costs, making the impact of exchange rate fluctuation less than 1 per cent of the variation in price. Cotton prices, while declining between 2013 and 2015, rose by 22.13 per cent in 2015–2017. During this same two-year period in which cotton prices increased, prices paid for imported trousers by supply chain lead firms declined by 11.48 per cent. Hence, the decline in the price of imported trousers is clearly not the result of declining cotton prices.
The Sourcing Squeeze: Survey Findings
A survey of 223 factories conducted in Bangladesh by this author in 2016 and 2017 provides further evidence of the sourcing squeeze. What the survey results indicate is that the average Free on Board (FOB) price was US$4.64 in 2016, which is a 7.79 per cent decline from an FOB price point of US$5.03 in 2011. If we look at exports to the United States, the price point declined by 10.67 per cent, while for European buyers the price point came down by 9.04 per cent. Indeed, in all major product categories, we find a decline in nominal prices paid per unit.
If production costs are going up while prices are going down, one way supplier factories can stay in business is to reduce profit margins (Staritz, 2011). The survey provides support for this dynamic. According to the survey results, profit margins decreased by 13.3 per cent between 2011 to 2016, with a mean 2016 profit margin of 7.69 per cent. 2 The push for shorter lead times—the time given to factories to make and ship a product—has received increased attention with the growth of fast fashion made famous by Zara’s model of short fashion seasons (Taplin, 2014). Many buyers are seeking to develop this model because, if they can get consumers who buy new styles with greater frequency, then they can sell more products each year. This is true for even retailers who do not engage in a full ‘fast fashion’ model, but are looking for greater speed to market. This allows them to manage inventory more effectively, which results in a reduced need for discounted products and, thus, greater revenue.
While there may be many inefficiencies along the entire supply chain, including getting products from in-country ports to retailers’ shelves, often the supplier factories are the ones which face the greatest pressure to contribute to a retailer’s desire for a speedy delivery to the market. When lead times are adjusted on short notice, this can put considerable pressure on a supplier’s business operation and may result in forced overtime or unauthorized sub-contracting. The survey findings indicate a reduction, since 2011, in lead times by 8.14 per cent, that is, from 93.4 to 85.83 days.
Sourcing Squeeze: Wages and Workers’ Rights
From a worker’s perspective, Bangladesh has long held the unenviable position of paying the lowest wages among major apparel exporting countries. Prior to the Rana Plaza disaster, the monthly minimum wage was Taka 3,000 per month (US$39). Following Rana Plaza, the minimum wages increased to Taka 5,300, which was US$68 per month at the 2013 exchange rate. According to ILO data for January 2015, Bangladesh’s minimum wages were the lowest among the top 10 garment exporting countries. Even if we assume slightly higher prevailing wages—some suppliers report average monthly wages of US$100 per month—this prevailing wage is still below the minimum wage of all other major competitors.
By February 2018, with the devaluation of the currency, the minimum wage was US$63.60 per month, a 6.47 per cent decline since 2013. Given that the normal work week in Bangladesh is 48 hours, and with 4.3 weeks in an average month, this means that the hourly minimum wage was US$31 cents per hour in February 2018. The prevailing wages only cover an estimated 14 per cent of living expenses, which is the lowest level among major apparel exporting countries (WRC, 2013). In sum, the pricing squeeze has resulted in persistently low wages that do not cover living needs.
This observation leads directly to the question of unionization rates and the ability of labour to bargain for higher wages. There has been much discussion and debate regarding the issue of workers’ rights in Bangladesh. Bangladesh has been repeatedly notified by the ILO that laws regarding freedom of association need to come into compliance with international standards, notably by allowing for unionization in export processing zones and facilitating the unionization process in the RMG sector by removing bureaucratic obstacles, government discretionary authority, and an unreasonably high 30 per cent membership threshold requirement. 3
These issues with the labour law are compounded by violations in practice. In December 2016, some 1,600 garment workers were dismissed and 34 trade unionists were arrested and detained following demonstrations in the Dhaka region of Ashulia. In the aftermath, pressure by national and international labour rights advocates escalated, demanding that the government release the detained workers and that buyers put pressure on the government and on suppliers to respect workers’ rights. As a result, several major brands announced that they would limit to observer status their participation in the February 2017 Dhaka Apparel Summit, stating that they were protesting the treatment of workers and trade unionists. Then, on 14 June 2017, the European Parliament passed a resolution stating that Bangladesh needed to address the persecution of trade union leaders and poor working conditions, including long working hours, low wages, uncertainty, and hazardous conditions. 4
To understand workers’ rights dynamics, it is also useful to examine the influence of pricing and other sourcing practices. Using a newly released data set hosted by the Center for Global Workers’ Rights, the Labour Rights Indicators, 5 we are able to observe three trends over time. In general, there has been an overall increase in the violation of workers’ rights since 2000. These violations continued to increase following Rana Plaza. During the first period of 2005–2009, when prices declined, violations of rights increased. Then, from 2005 to 2009, export prices to the United States levelled off and violations decreased. Prices increased in 2009–2012, but declined again in 2012–2015, once again leading to a rise in violations.
In sum, workers’ rights compliance remains a significant issue in Bangladesh. The responsibility to address these violations rests with suppliers and the government. But, as the data suggest, it also rests with buyers who must adjust their sourcing practices to facilitate compliance with labour standards and workers’ rights.
Accord on Fire and Building Safety
While progress has not been made on the question of wages and only limited progress has been made in the area of workers’ rights, more significant progress can be seen in the area of building safety. This is principally the result of the Accord on Fire and Building Safety in Bangladesh, the largest of several building safety initiatives, which covers more than 2 million workers. One important reason for this success is because building safety is covered by a binding Accord involving international brands and retailers. Notably, Article 22 of the Accord states that ‘[p]articipating brands and retailers will negotiate commercial terms with their suppliers which ensure that it is financially feasible for the factories to maintain safe workplaces and comply with upgrade and remediation requirements instituted by the Safety Inspector’. 6 Other crucial factors of the Accord include governance, transparency, worker participation through the formation of Safety Committees, and a complaint mechanism.
Governance
Unlike CSR programmes, which are not only voluntary and most often do not include labour unions in their governance, the Accord’s governance structure entails a Steering Committee (SC) comprising three representatives chosen by the trades union signatories, three representatives chosen by the company signatories, and an ILO representative serving as a neutral chair. The SC oversees the operations of the Accord, including selecting and reviewing the performance of the Safety Inspector and Training Coordinator. The SC seeks decision by consensus. In the absence of consensus, decisions are made by majority vote. The Accord has an Advisory Board made up of representatives from supplier factories, sourcing agents, the Ministry of Labour, IndustriAll RMG trade union federations, Accord signatory brands, and Bangladesh non-governmental and civil society organizations. In the case of building evacuations, the Accord submits its recommendation with its inspection results to the government of Bangladesh Review Panel. An initial evacuation recommendation can be overturned with a unanimous decision by the government of Bangladesh, the Bangladesh University for Engineering Technology, one engineer from the Accord, and one engineer from the Alliance.
Building Safety/Factory Inspection
The Accord’s most crucial mandate is to ensure that more than 1,600 factories of its signatory brands are safe for the over 2 million employees in these factories. To this end, the Accord has a budget of approximately US$11 million per year and has hired and trained 94 fire, electrical, and structural safety engineers; 35 remediation and complaints case handlers; and 30 trainers and 15 training assistants. The most dramatic illustration of its work to ensure worker safety has been the temporary evacuation of 50 factories in which the structural integrity of these buildings fell below the acceptable level of safety. The Accord also terminated 96 factories for failure to implement required safety renovations, meaning that these factories can no longer sell goods to any Accord signatory brand.
As of 1 January 2018, Accord inspectors had detected 131,953 building safety issues: 44,621 fire issues, 66,449 electrical issues, and 20,883 structural issues. Of these, 86,684 were from initial inspections and 45,269 were detected during follow-up inspections. Of these, 36,241 fire safety issues (81%), 57,906 electrical issues (87%), and 14,841 structural issues (71%) were either fully corrected and verified or corrected with verification pending.
Some areas of progress are particularly notable. For example, 97 per cent of lockable and collapsible gates have been removed and 82 per cent of factories have adequate electrical cables and wiring. Issues related to electrical circuit breakers, cabling and wiring, distribution panels, and earthing systems have remediation rates of approximately 90 per cent. Other factors have experienced delays, particularly in the area of structural safety, where, out of the 20,883 issues detected, 12,323 have been verified fully remediated and another 2,532 have been corrected but are pending verification by Accord engineers.
Transparency
Transparency is a crucial component of what makes the Accord work (James, Miles, Croucher, & Houssart, 2018). Since the beginning of the CSR movement in the apparel sector, there has been a long tension between activists and corporations: would corporations release the name and locations of their factories? Would they post their auditing reports? Is there a third-party complaint system, and are those complaints made public? The assumption is that if the public has the ability to see this information, then corporations will behave more ethically. Transparency, as one group of scholars noted, could ratchet up labour standards (Fung, O’Rourke, & Sabel, 2001). The problem is that most firms are still not fully transparent with their information. Some firms do not release their list of factories, and the ones that do share this information often limit themselves to Tier 1 suppliers. Also, while firms may indicate factory compliance levels in factory data set and annual reports, few factories share their detailed factory audits with the general public. Even multi-stakeholder initiatives that post factory audits often choose not to provide factory names (Anner, 2017a). Hence, the importance of the Accord’s transparency cannot be overstated.
The Accord provides publicly available information in six major areas:
List of factories covered by the initiative: This list goes beyond providing factory names and addresses. It also indicates whether the factory is situated in a multi-purpose building or a multi-factory building; its number of floors; whether it is a Tier 1, Tier 2, or Tier 3 factory; and its number of workers. This information allows one to study changes overtime, such as the reduction in the use of multi-purpose buildings.
7
The Accord also provides a full list of terminated factories and the reason for their termination.
8
Ongoing progress of remediation: It includes detailed quarterly reports. It is possible to get an update snapshot of remediation by visiting the progress section of the Accord’s website, with a list of findings by area (structural, electric and fire safety).
9
More details on progress are provided through quarterly reports, which are also accessible on the website.
10
Corrective action plans: Corrective action plans show findings and remediation progress for individual Accord-covered factories. The database also indicates in which factories remediation is completed, on track, or behind schedule. Also, it shows whether or not factories have a financial plan to cover the costs of remediation.
11
Worker complaints: The Accord receives complaints from workers and their representatives on issues related to occupational safety and health (as elaborated in the next section). Each complaint—including non-occupational health and safety complaints—are recorded and detailed on the website. The status of complaints is also indicated.
12
SC meeting minutes summary: The Accord SC meets four times per year. While all elements of the discussion are not included, a fairly detailed summary of these minutes are posted online, including who participated in each meeting, what topics were discussed, and what follow up steps will be taken to address pending issues.
13
Advisory Board Meeting Reports
14
: The Accord Advisory Board consists of representatives from supplier factories, sourcing agents, the Ministry of Labour, IndustriAll RMG trade union federations, Accord signatory brands, and Bangladesh NGOs/CSOs. By the end of 2017, it had met 13 times. The meetings are often used to provide information and receive input from members.
15
Safety Committees
Worker participation has long been considered a crucial component of achieving a safe workplace. This is because workers are often the first ones to detect violations and because they have a considerable interest in having those violations addressed quickly. The most effective worker voice is provided by democratic trade unions that operate independent of management and government control (Anner, 2018). The Article 17 of the Accord notes the obligation to establish worker-managed health and safety committees in Accord factories. The Accord indicates that the committees should be democratically elected, while also being in compliance with the Bangladeshi law. After the Accord was signed, the government of Bangladesh mandated safety committees in all Bangladesh factories, not just Accord factories. However, instead of requiring the democratic election of safety committee members, as the Accord had anticipated, the new law indicated that the participation committees—elected worker-management committees that existed prior to the new law—would name the members of the safety committees.
The Accord started its health and safety training process with the 65 unionized factories among Accord suppliers because, in these cases, the worker voice mechanism was more clearly established. By January 2018, the Accord had hired 40 trainers and 15 safety training programme assistants. By February 2018, the Accord was conducting training in 876 factories, and, by March, Accord trainers expected to be in 1,070 factories. Safety committee training includes seven in-depth units that require 21 hours of training. In addition, the Accord holds ‘all employee meetings’ to provide a general overview of factory safety to workers. As of March 2018, the Accord had distributed more than 2.1 million safety booklets to workers.
Complaint Mechanism
Worker voice is a crucial part of factory safety. Accord engineers cannot be in all factories at all times. Thus, the ability of workers to speak up and voice their concerns pro-actively is an important part of any factory safety programme. Article 18 of the Accord stipulates that the ‘Safety Inspector shall establish a worker complaint process and mechanism that ensures that workers from factories supplying signatory companies can raise in a timely fashion concerns about health and safety risks, safely and confidentially, with the Safety Inspector’. 16 Complaints can be individual or collective, and complainants can choose to remain anonymous if they prefer. All complainants are protected from discrimination or reprisal.
As of 1 March 2018, some 571 complaints were presented to the Accord, of which 414 were determined to fall under the health and safety mandate, where 157 were outside the mandate. It is notable how broad the mandate is for this process. For example, on 19 August 2017, workers at Fariha Knit Tex presented a complaint regarding working hours. The Accord reviewed the case because excessive hours of work could reasonably impact the safety and health of those workers who were working such long hours. Other notable cases included violence against workers, which the Accord addressed. Currently, 197 complaints have been resolved and 88 complaints are under investigation.
In another notable case, on 23 July 2017, a representative of a safety committee at the Unique Designers factory complained that he/she was fired as a result of participation in the safety committee. Following an investigation, the Accord found that he/she was indeed terminated due to participation in their committee. The Accord required the employee’s reinstatement, and the factory complied. Similar cases took place with union representatives who participated in safety committees at Dress & Dismatic in March 2015 and Nexus Sweater in October 2016. In both cases, the unionists were subsequently reinstated following an Accord investigation. The ability of a programme to protect employee committee members is a crucial element of their potential success (Anner, 2017b; Weil, 2014). Of the 15 labour federations that participated in the Accord process, most of them have used the Accord Complaints Mechanism at least once (Bride, 2017).
Binding Arbitration
One of the core pillars of the Accord—an element that makes it stand out from other monitoring programmes—is its binding nature. Article 5 of the Accord allows for either party (labour or companies) to make use of binding arbitration following protocols of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the UNCITRAL Model Law on International Commercial Arbitration. The goal of this clause in the Accord was not that it would be used with significant frequency, but that it would create an incentive for parties to meet their obligations in order to avoid such a process. Nonetheless, the labour signatories to the Accord did decide it was necessary to use Article 5 in the case of two companies.
In 2016, IndustriALL and UNI Global Union filed cases against two Accord signature companies with the Permanent Court of Arbitration at The Hague. The unions stated that two global brands had failed to get their supplier factories in Bangladesh to fix building safety violations within the mandatory deadlines. They argued that they failed to negotiate commercial terms to make it financially feasible for their suppliers to cover the costs of remediation. On 4 September 2017, the Permanent Court of Arbitration unanimously decided that ‘the pre-conditions to arbitration under Article 5 of the Accord had been met. Accordingly, the claims were held to be admissible and within the Tribunal’s jurisdiction’. 17 In response to the ruling, Jenny Holdcroft, Assistant General Secretary of IndustriALL Global, observed, ‘[f]or any brand that isn’t in compliance, this decision sends a message that they cannot shirk their responsibilities to worker safety’ (IndustriALL, 2017).
In December 2017, the unions reached a settlement with the first brand that resulted in considerable support for remediation provided to its 200 supplier factories in Bangladesh. Then, on 22 January 2018, the unions reached a US$2.3 million settlement with the second multinational brand that had been accused of delays in remediating building safety hazards at its 150 supplier factories. The impact of these cases went far beyond the two brands involved in the case. The message became clear to all brands and retailers that they needed to ensure remediation or face real consequences. Christy Hoffman, the Deputy General Secretary of UNI Global referred to the agreement as ‘groundbreaking’, noting that it ‘proves the validity of the arbitration process. It’s a turning point for business and human rights’ (cited in Rushe, 2018, p. 2). IndustriALL’s General Secretary, Valter Sanches, added, ‘[t]his settlement shows that the Bangladesh Accord works. It is proof that legally binding mechanisms can hold multinational companies to account’ (cited in Rushe, 2018, p. 2).
Case of US Agriculture Workers and the Fair Food Program
The case of agricultural workers in the United States illustrates the potential adverse effects of the growth of supply chains within a developed market economy. Moreover, as Hopkins and Wallerstein (1986, p. 160) observed, ‘the concept of a commodity chain does not presume either a geographically dispersed division of labor or the interrelation or separation of states via commodity movement’. Here we have a case of US farmers being squeezed within the United States by US retailers. Farmworkers in the United States are excluded from the National Labor Relations Act. As a result, they are denied their full rights to organize in trade unions, receive overtime, and even receive a proper minimum wage. Most crop workers are migrant workers, principally from Mexico.
Research by Oxfam America has found that approximately 75 per cent of farmworkers live below the poverty level, adding the following point (Oxfam, 2004, pp. 2–3):
[d]istressingly, the piece rate for tomato pickers has barely risen in 20 years, and workers today are effectively paid 30% less than they were in 1980. Because of their poverty, the majority of these farmworkers live in severely overcrowded and substandard housing, often in labor camps that routinely violate federal regulations. In addition to being one of the worst paid, farm labor is also one of the most dangerous jobs in America. At work, farmworkers suffer higher rate of toxic chemical injuries than workers in any other sector of the US economy, with an estimated 300,000 farmworkers suffering pesticide poisonings each year. They also suffer extremely high rates of workplace accidents.
In Immokalee, Florida, farmworkers began meeting in the early 1990s to discuss strategies to address these conditions. Organized as the Coalition for Immokalee Workers (CIWs), they came to two main conclusions. First, they needed to target the large corporations at the top of the food supply chain. Second, they needed to develop broad community support and a social movement campaign to target these corporations. They organized hunger strikes, protest marches, public shaming activities, and eventually a boycott against Taco Bell, a fast-food restaurant chain that, in 2004, purchased 10 million pounds of tomatoes grown in Florida (Leary, 2005). The main slogan of the campaign—which was endorsed by labour unions and activist organizations across the country—was ‘end sweatshops in the fields’ (ibid., p. 15). Thus, the campaign drew direct comparison to campaigns to end abusive labour conditions in apparel global supply chains.
In 2005, Taco Bell and its parent company, Yum!, agreed to pay one cent more per pound for the tomatoes at its 6,500 Taco Bell restaurants. These tomatoes were purchased from supplier farms of Taco Bell, the ‘buyer’ or ‘lead firm’ in the supply chain. The impact of this change in the pricing practice of the lead firm was a doubling of the wages of the workers for the suppliers (Drainville, 2008). Following its success with Taco Bell, the CIWs launched a successful two-year campaign that targeted McDonald’s USA, the largest fast-food burger company in the country. Once again, the workers focused not on the supplier farms that employed them, but rather on the lead firm, McDonald’s, that purchased the tomatoes from the suppliers. Like Taco Bell, McDonald’s succumbed to the campaign and agreed to pay one cent more per pound, which amounted to a 75 per cent increase in the price it paid for tomatoes. As a result, the payment to workers per 32-pound bucket increased from approximately 42.5 cents to 74.5 cents, a 75 per cent increase. Between 1,000 and 1,500 workers who pick tomatoes in McDonald’s supply chain benefitted from the agreement (Lantigua, 2007).
The campaigns illustrate that farmworker organizers had come to the realization that ‘the huge multinational corporations at the top of the food system were not merely complicit in the human rights abuses occurring in their supply chains, but that their purchasing practices were in fact a major contributing factor’ (Asbed & Hitov, 2017, p. 505). This was because (like large apparel retailers) food lead firms could leverage their volume purchases to demand lower prices from their suppliers, and the downward pressure on prices translated to downward pressure on wages and working conditions (ibid, p. 506.) What began in Florida in the early 1990s became the Fair Food Program (FFP) in 2011, which expanded to 7 states and encompassed 14 companies, including Burger King, Whole Foods, Subway, and Walmart (FFSC, 2018). By 2017, the FFP ensured that US$26 million was paid by corporations directly to farmworkers through a pass-through system in which payments from the lead firms were passed on to farmworkers in their regular paychecks to augment their wages (ibid., 2018). Like the Accord, the agreement is binding; farms that fail to comply with the programme are suspended and unable to sell to participating buyers (ibid.). Enforcement of the agreement is ensured by the Fair Food Standards Council (FFSC), which audits farms and is empowered to suspend suppliers who do not comply with the programme’s code of conduct. As a result, the FFP reverses the downward pressure of lead firms by ‘enlisting the resources of participating food industry leaders to improve farmworker wages and harnessing their demand to reward growers who respect their workers’ rights’ (FFSC, 2015).
No doubt, there are many differences between agriculture and apparel manufacturing, including forms of employment contracts and conditions of work. Yet, it is noticeable how some supply chain dynamics in these two sectors share certain similarities. Agricultural workers, like apparel workers, face a squeeze on their wages and working conditions resulting from the role of lead firms at the top of supply chains. Indeed, it is notable that the largest retailer in the United States, Walmart, uses its oligo-psonistic supply chain power over its large networks of suppliers to squeeze down on the price it pays for the food and apparel it sources. In a general sense, like the Bangladesh Accord, the FFP attempts to address labour issues by leveraging the lead firms at the top of supply chains to hold them responsible to the cost of more equitable production through a binding agreement.18
Conclusions
The causes of global inequality are complex and multifaceted. One contributing factor is the extreme power imbalance in supply chains, between the firms at the top and the workers at the bottom. In the global apparel industry, changing trade rules and buyer consolidation has intensified a sourcing squeeze that has put downward pressure on wages and working conditions, encouraged anti-union practices, and contributed to building safety issues, the most dramatic of which was seen in the Rana Plaza building collapse of 2013. Indeed, prices have not been adjusted upward to cover the 2013 increase in the minimum wage, lead times have gotten shorter, and the violation of workers’ rights has increased. Consolidation in supermarkets and other food industry sectors has put downward pressure on farms, which, in turn, squeeze their workers. Farmworkers in the USA remain among the most underpaid, overworked, and least protected workers in the country.
Yet, recent approaches to addressing workers’ rights have resulted in some progress. Data on the Bangladesh Accord indicate that the Accord has corrected 99,310 high-risk fire, structural, and electrical safety violations hazards in 1,619 factories. The Accord also has terminated 96 factories for failure to implement required safety renovations. Also, the Accord required 50 factories to be temporarily evacuated due to their severe and imminent risk of structural failure. As of March 2018, 96.5 per cent of Accord factories no longer lack safe means of egress due to lockable or collapsible gates. Further, the Accord has provided in-depth health and safety training to personnel in 846 factories and has investigated and resolved 183 worker complaints.
In the United States, the FFP has resulted in important wage increases and a dramatic reduction in forced labour and sexual harassment on farms.
Overall, these models have been a success because they negotiated between buyers and workers (or their representatives), hold suppliers and buyers responsible for the cost of compliance, are legally binding, and are transparent. The challenge for these agreements going forward is spreading their breath and geographic scope. The model of the Bangladesh Accord needs to go beyond building safety in one country to more fully address freedom of association rights and living wages. The FFP realizes it needs to organize agricultural workers in more sectors and more states. What is most important is that these programmes provide a model for going forward.
Footnotes
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The author received no financial support for the research, authorship and/or publication of this article.