Child Labor Report 2005
discussed in Chapter II, enforcement of corporate codes of conduct depends
on the system used by U.S. corporations to ensure compliance. Corporations
responding to the survey indicated that they used a graduated system to
respond to violations, including: a) monetary fines or penalties; b)
probationary status; c) demand for corrective action; d) providing education
(particularly where child labor violations are involved); e) cancellation of
an individual contract; and f) severance of the relationship. Positive
reinforcement included: a) retention of current contracts; and b) awarding
of additional contracts.
Information regarding enforcement of codes of conduct is reported in this
section, arranged around the following issues:
- What corrective measures do U.S. corporations use to address
violations of their codes of conducts by foreign suppliers?
- What specific mechanisms are used by U.S. corporations to
reward suppliers which comply with codes of conduct?
As has been discussed above, Department of Labor officials
learned that many U.S. corporations engage in extensive screening of
foreign garment contractors prior to entering into a supply
relationship. The purpose of the screening process is primarily to
set aside companies that did not have the ways and means to carry
out quality production. The contractor's ability to comply with
labor standards provisions in codes of conduct - and child labor
provisions in particular - is increasingly part of the screening
- For example, in El Salvador, Lindotex representatives
stated that before starting production for a new foreign
purchaser, representatives of the purchaser come to El Salvador
and inspect local companies to see if they qualify. These
inspectors look at whether companies comply with national laws
with regard to pay, overtime, child labor, bathrooms per worker,
occupational hazards, etc. Workers must show a birth certificate
or other official document showing age to be hired.
- In India, Associated Indian Exports, an apparel-buying
office located in New Delhi with regional offices in Bangalore and
Bombay, operates as a middleman or facilitator between foreign
purchasers and Indian producers and currently represents Sears,
Wheat Seal, and Casual Corner. Most of its U.S. customers require
that the Indian producers sign a declaration containing a
statement that no child labor was used in the production of the
item. (If a contractor uses a subcontractor, it must also certify
for the subcontractor.)
- For example, Sears has a 20-page survey questionnaire that
the Indian supplier must sign; other U.S. importers have a 2 to
5-page agreement. For each potential supplier to Sears,
Associated Indian Exports administers the 20-page
questionnaire/evaluation form, including the taking of
photographs of the production area. Sears' central office must
be satisfied with the results of the supplier survey before it
enters into a contract.
- If a potential Sears supplier is rejected, the supplier is
told why and what needs to be done to correct any deficiencies.
There is no regular inspection or monitoring of the requirements
of a supplier once it is certified, but each supplier must
undergo re-certification every 3 years.
Companies that have passed the screening process and have become
contractors of U.S. corporations may face a range of corrective
measures should they fall short in complying with the code of
conduct. For example:
- In Guatemala, although garment contractors and
subcontractors were unable to articulate the U.S. companies'
policies to address violations of their codes of conduct, they
expressed great concern about the possibility of losing their
contracts if they were found to have child labor problems.
- At Lindotex, an inspector from The Gap recently recommended
that the company provide more fire extinguishers.
- A representative of Phillips-Van Heusen stated that in May
1996, his company had identified three young workers (under 15
years of age) in a plant operated by a subcontractor in San
Pedro de Sacatepequez. Upon learning of their presence,
Phillips-Van Heusen required the company to dismiss the three
young workers immediately.
- In the Dominican Republic, many companies stated that
U.S. clients had requested changes in the physical conditions of
the factories during their visits to the companies. These changes
often included requirements for eating facilities, bathrooms, and
more lighting or ventilation. In most cases, changes with regard
to working conditions, were related to safety and health issues.
Most of the companies that had contracts with Levi Strauss in the
Santiago Zona Franca said that Levi Strauss requested all
companies to reinforce, move, or rebuild wooden mezzanines - where
sewing machines were stationed - as a fire safety precaution.
- Undergarment Fashions mentioned that JCPenney, in addition
to performing periodic visits to the plant, also had a rating
system to evaluate the contractor's performance. Under this
rating system, a company must receive at least 50 points in
order to maintain its current contract. If the company does not
obtain a satisfactory rating, it is put on probation and given a
reasonable period of time to make the requested changes.
- High Quality Products, located in Zona Franca Los
Alcarrizos, a contractor for the Jones Apparel Group, said that
Jones Apparel terminated a contract with Bonahan Apparel (Zona
Franca Bonao) because of Bonahan's refusal to recognize the
establishment of a union in its plant.
- In Honduras, Rothschilds made a number of
recommendations regarding clean toilets, lighting, ventilation,
drinking water, and hours of work for 14- and 15-year-old workers
at Global Fashions.
Respondents to the voluntary survey of U.S. retailers and garment
manufacturers made extensive reference to the streamlining of the
supplier base that is taking place in the industry. In part because
of the priority to improve quality, but also because of a concern
about violations of labor standards - and child labor provisions
more specifically - U.S. garment importers have cut back sharply on
subcontracting and also reduced the number of their foreign
suppliers. From the point of view of foreign garment producers, the
streamlining of suppliers carried out by the U.S. garment industry
has resulted in clear winners and losers.
- On the one hand, suppliers to the U.S. market that can meet
quality and timeliness of product considerations and comply with
codes of conduct have been rewarded with continuation of orders
and with additional orders diverted to them from producers that
rely on subcontracting schemes.
- On the other hand, marginal suppliers - in terms of quality
and timeliness of output, physical plant, or ability to comply
with labor standards - have been shunned, losing their contracts
with U.S. importers and having to resort to sales to other
less-profitable markets, including their own domestic market.
Continued access to the U.S. market is a very large incentive for
overseas garment producers to meet quality/timeliness requirements
and comply with codes of conduct. Thus, the prospect of the
continued ability to ship to the U.S. market reinforces compliance
with appropriate standards. Foreign countries also have a great deal
at stake, as unused quota allocations translate into the loss of
export revenue to the nations in the short term and loss of quota in
the longer term.
Child Labor Report 2005