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Information from Nongovernmental Labor Monitoring Systems

Over the last several years, a new set of regulatory processes has emerged to respond to concerns about “sweatshop” conditions through the development and implementation of nongovernmental systems of labor monitoring and reporting. These nongovernmental monitoring systems seek to affect firms across their supply chains through “voluntary” standards (sometimes developed in cooperation with nongovernmental organizations [NGOs] and unions), internal and external monitoring systems, new sanctions and incentives, and different levels of public reporting.

In order to advance their strategies, the nongovernmental monitoring organizations are taking on activities that were previously the purview of state and international regulatory bodies. They are working to fill holes in traditional government regulation and to transform the nature of existing monitoring. These initiatives involve new forms of collaboration, new roles for NGOs, new responsibilities of firms, new responses from local and national government authorities, and most important for this study, new types of information on the compliance of firms with international labor standards.

These nongovernmental systems of labor monitoring and reporting are expanding extremely rapidly across industries and regulatory arenas—now covering garments, shoes, toys, forest products, oil and gas, mining, chemicals, coffee, electronics, and even tourism (Herrnstadt, 2001; Gereffi et al., 2001; Wick 2001; Cashore, 2002). However, to date very little rigor-



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Monitoring International Labor Standards: Techniques and Sources of Information 3 Information from Nongovernmental Labor Monitoring Systems Over the last several years, a new set of regulatory processes has emerged to respond to concerns about “sweatshop” conditions through the development and implementation of nongovernmental systems of labor monitoring and reporting. These nongovernmental monitoring systems seek to affect firms across their supply chains through “voluntary” standards (sometimes developed in cooperation with nongovernmental organizations [NGOs] and unions), internal and external monitoring systems, new sanctions and incentives, and different levels of public reporting. In order to advance their strategies, the nongovernmental monitoring organizations are taking on activities that were previously the purview of state and international regulatory bodies. They are working to fill holes in traditional government regulation and to transform the nature of existing monitoring. These initiatives involve new forms of collaboration, new roles for NGOs, new responsibilities of firms, new responses from local and national government authorities, and most important for this study, new types of information on the compliance of firms with international labor standards. These nongovernmental systems of labor monitoring and reporting are expanding extremely rapidly across industries and regulatory arenas—now covering garments, shoes, toys, forest products, oil and gas, mining, chemicals, coffee, electronics, and even tourism (Herrnstadt, 2001; Gereffi et al., 2001; Wick 2001; Cashore, 2002). However, to date very little rigor-

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Monitoring International Labor Standards: Techniques and Sources of Information ous analysis has been conducted on the effects and implications of these potentially transformative institutions, and the analysis that has been conducted has been highly contentious, either advocating programs or dismissing them out of hand. Advocates tout these initiatives as more flexible, efficient, democratic, and effective than traditional labor regulation (see, e.g., Bernstein, 2001), while critics conversely assert that nongovernmental monitoring is a corrupt attempt to free industry from the last vestiges of state regulation and union organizing (see, e.g., Justice, 2001). Proponents argue that these systems can supplement and even support government regulation; opponents assert that nongovernmental monitoring implicitly challenges the legitimacy and efficacy of state regulation. Some fear nongovernmental systems of monitoring will preempt or “crowd out” workers’ organizing efforts and the current role of unions; others believe these systems can support worker empowerment and participation in shop-floor negotiations. Some believe the new monitoring and certification will provide consumers with a false sense that problems have been solved and will demobilize international labor and environmental campaigns; others see the information generated by nongovernmental monitoring as key to transforming how people produce, consume, and regulate around the world. This chapter seeks to describe and assesses the nature of these initiatives and, in particular, the information they are producing on compliance with international labor standards. Based on interviews with staff of each of the leading initiatives in the United States and Europe, interviews with multinational managers and advocacy organizations, a review of the existing literature and program documents, and direct evaluation of monitoring activities in China, Korea, Indonesia, and Mexico, the chapter details efforts at nongovernmental labor monitoring, explains how these systems function, describes the challenges they face, and evaluates their effectiveness in improving labor practices. The chapter also discusses the information made available through voluntary codes and monitoring systems, to whom this information is made available, and for what purposes. It also briefly discusses information quality and reliability issues, and the relevance and value of this factory- and brand-level data for evaluating national compliance with international labor standards. The chapter concludes with a discussion of means to strengthen information access through nongovernmental regulatory programs and to more generally support efforts to improve conditions in the global workplace.

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Monitoring International Labor Standards: Techniques and Sources of Information NEW SYSTEMS OF LABOR MONITORING Nongovernmental systems of labor monitoring and reporting are both more diverse and “messier” than traditional regulatory approaches, going beyond fixed rules and standards, government monitoring and enforcement, and judicial review (Arthurs, 2001; Lipschutz, 2000; Reinicke, 1998). Nongovernmental initiatives involve multiple actors in new roles and relationships, experimenting with new processes of standard setting, monitoring, benchmarking, public reporting, and enforcement. In a number of ways, these new initiatives follow the evolving global production processes. As networks of production extend out along increasingly complex supply chains, interested stakeholders are exploring systems of dispersed but interconnected monitoring. These emerging systems are almost as complex as the supply chains they seek to monitor. A critical shift in this process is the move from factory-centered, state regulation that focuses on individual sites of production to supply-chain and brand monitoring that focuses on multiple actors in a production chain. This shift involves establishing systems of accountability and management of performance across factories and nations. The new monitoring system attempts to create a network of regulators that involve multiple stakeholders along global supply chains. While traditional regulation involves a national government establishing standards and policing performance, in contrast, outsourced monitoring involves NGOs and firms in standard setting and regulations, with the International Labour Organization (ILO) core standards and local laws as minimum standards. While traditional regulation uses state sanctions to enforce standards, outsourced monitoring relies largely on market sanctions—either through interfirm purchasing decisions or NGO consumer campaigns. While government regulation is hierarchical and arms-length, outsourced monitoring is networked at multiple levels and engaged with multiple actors in the supply chain. Nongovernmental monitoring is actually a diverse family of regulatory strategies, many of which are currently in competition. Even the terminology used to describe these systems is contested. In this chapter we use “internal monitoring” to refer to monitoring conducted by brands and retailers, “external monitoring” to refer to monitoring conducted by third-party organizations, and “verification” to refer to independent evaluations (not paid for by those being monitored) of the results of codes and monitoring systems.

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Monitoring International Labor Standards: Techniques and Sources of Information CODES OF CONDUCT Nongovernmental monitoring systems are based on voluntary standards, usually embodied in codes of conduct, which specify norms and rules by which to evaluate factory performance. These standards are sometimes quite specific, detailing precise rules of action; in other cases, they present only general principles of good practice (Braithwaite and Drahos, 2000). In both the United States and Europe, NGOs are now at the fore-front of efforts to develop entirely new institutions (some nongovernmental, some public-private partnerships) to advance codes and to define institutional procedures to monitor compliance. Increased pressure from labor and human rights groups has motivated a growing number of multinational corporations to adopt codes of conduct and to submit to some form of external monitoring.1 Codes related to labor standards were originally quite diverse (Varley, 1998; Diller, 1999; Compa and Hinchliffe-Darricarrere, 1995) but appear to be converging now around the ILO core standards and basic principles regarding health and safety, wages and hours, and treatment of women.2 While the general range of issues addressed in these systems is fairly similar (van Tulder and Kolk, 2001), the details of codes can vary considerably. Table 3-1 presents a summary of the codes of conduct advanced by the four primary U.S. monitoring systems. Key debates continue around such issues as freedom of association, wages (minimum vs. prevailing vs. “living”), and the scope of “nondiscrimination” clauses. The multiplicity of codes of conduct, however, is a cause for concern. Multiple codes of conduct can lead to excessive and contradictory monitoring of a single factory and to managerial resistance to attempts at positive change. Also, in some countries, there may be a discrepancy between the host country’s labor laws and the terms set forth by codes of conduct. In such instances, companies may be pressured to comply with the less stringent national labor law or with the least stringent code of conduct. Systems for implementing and evaluating code compliance are obviously critical to the credibility of these codes. To these ends a number of initiatives have 1   For comparisons of company codes, see van Tulder and Kolk (2001) or company web pages, such as http://www.nikebiz.com [October 16, 2003] and www.gapinc.com [October 16, 2003]. 2   Nadvi and Wältring (2001, p. 34) note that “despite the toothless nature of core labour standards, they have become a model for private social standards.”

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Monitoring International Labor Standards: Techniques and Sources of Information emerged over the last several years to foster the implementation, monitoring, and verification of codes. INTERNAL FIRM COMPLIANCE MONITORING Many large brands and retailers have developed procedures for monitoring supplier compliance with their newly created codes of conduct. The Gap, for instance, has a Vendor Compliance Department with more than 100 staff who are responsible for monitoring the implementation of the company’s code of conduct throughout its global supply chain. Levi’s, Disney, Wal-Mart, H&M, and other companies have established similar programs. These systems can either be extensions of existing supply-chain management programs—simply adding labor, human rights, and environmental concerns to current systems for evaluating quality, timeliness, price, etc.—or they can involve entirely new systems for internal monitoring and evaluation. Some companies are asking their quality control and purchasing staff to take on code compliance as an additional task, while others are hiring dedicated staff to conduct precertification audits of contractors and ongoing assessments of code compliance. Nike was one of the first companies in the apparel and footwear industries to develop an internal compliance division.3 In 1992, Nike established a code of conduct on labor and environmental practices for its network of suppliers which now cover more than 900 factories with more than 650,000 workers around the world. Supplier compliance with the code is monitored through a program of internal evaluation conducted first by Nike staff and then reviewed by external accounting, health and safety, and environmental consulting firms. Nike has developed internal monitoring tools, such as its SHAPE (Safety, Health, Attitude of Management, People Investment, and Environment) Audit and MESH (Management, Environment, Safety, and Health) Program that allow the company to integrate the evaluation of labor and environmental issues into broader management practices and training.4 MESH resembles the 14000 Management Auditing Program of the International Organization for Standardization, though 3   Levi Strauss is reported to have developed the first code of conduct in the industry in 1991 (http://www.levistrauss.com/responsibility/conduct). 4   See http://www.nike.com/nikebiz/nikebiz.jhtml?page=25&cat=compliance&subcat=mesh [October 16, 2003].

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Monitoring International Labor Standards: Techniques and Sources of Information TABLE 3-1 Codes of Conduct Standard Fair Labor Association (FLA)a SA8000b Worldwide Responsible Apparel Productionc Workers Rights Consortium (WRC)d Child labor, minimum age 15 or 14 if country of manufacturer allows or age for completing compulsory education. 15 or 14 if meets developing country exemption, or local minimum age if older. 14 or age for completing schooling or minimum age established by law, whichever is older. 15 or 14 if consistent with ILO practices for developing countries. Harassment and abuse No employee shall be subject to any physical, sexual, psychological, or verbal harassment or abuse. No corporal punishment, mental or physical coercion, or verbal abuse; no sexually coercive or exploitative behavior. No harassment, abuse, or corporal punishment in any form. No employee shall be subject to any physical, sexual, psychological, or verbal harassment or abuse; no corporal punishment. Nondiscrimination No discrimination in hiring, salary, benefits, advancement, discipline, termination or retirement, on basis of gender, race religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin. No discrimination in hiring, compensation, access to training, promotion, termination, or retirement based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, or political affiliation. No discrimination on basis of personal characteristics or beliefs; question about discrimination based on seniority. No discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination, or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, political opinion, or social or ethnic origin

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Monitoring International Labor Standards: Techniques and Sources of Information Freedom of association and collective bargaining If right restricted by law, employer shall not seek state assistance to prevent workers exercising right to freedom of association. If right restricted by law, employer facilitates parallel means for free association and bargaining. Lawful right of free association, including right to join or not join an association. No employee shall be subject to harassment, intimidation, or retaliation in efforts to freely associate. Health and safety Safe and healthy working environment is required. Standard also applies to employer-operated facilities apart from production facilities ( e.g.,housing). Safe and healthy working environment is required. If provided, housing should be clean and safe. Steps are taken to prevent accidents and injury. Regular health and safety training is required. Safe and healthy working environment is required. If provided, housing should be safe and healthy. Safe and healthy working environment is required. Wages Local minimum wage or prevailing industry wage, whichever is higher, and legally mandated benefits. Legal or prevailing industry wage and meet basic needs and provide discretionary income. Legal minimum wage. Legal minimum wage and benefits. WRC code requires paying a “living wage.”

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Monitoring International Labor Standards: Techniques and Sources of Information Standard Fair Labor Association (FLA)a SA8000b Worldwide Responsible Apparel Productionc Workers Rights Consortium (WRC)d Hours of work 8 hours per week and 12 hours overtime or the limits on regular and overtime hours allowed by the law of the country; 1 day off in every 7. 48 hours per week and 12 hours overtime maximum. Personnel shall be provided with at least 1 day off in every 7-day period. All overtime work shall be reimbursed at a premium rate. Shall not exceed the legal limitations of the countries in which apparel is produced; 1 day off in every 7- day period, except as required to meet urgent business needs. Not be required to work more than the lesser of (a) 48 hours per week or (b) the limits on regular hours allowed by the law of the country of manufacture, and be entitled to at least 1 day off in every 7-day period, as well as holidays and vacations. aFor more information, see http://www.fairlabor.org [November 24, 2003]. bFor more information, see http://www.SA8000.org [November 24, 2003]. cFor more information, see http://www.wrapapparel.org [November 24, 2003] dFor more information, see http://www.workersrights.org [November 24, 2003]. SOURCES: Data from organizational websites and Maquila Solidarity Network (2001b).

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Monitoring International Labor Standards: Techniques and Sources of Information it seeks to go further by evaluating actual factory performance. Nike now has more than 85 staff who monitor labor and environmental conditions in the company’s contractor factories. Reebok and Adidas, Nike’s main competitors, along with many other prominent footwear and apparel firms, have established similar programs that combine in-house assessment with audits by consulting firms. Reebok, for instance, has instituted a worldwide Human Rights Production Standards Factory Performance Assessment System, while Adidas has created “standards of engagement” for labor practices and health, safety, and the environment for all its subcontractors.5 Through these auditing tools, companies like Nike, Reebok, and Adidas now regularly rate their subcontractors for environmental and labor performance. In the case of Nike, points are assigned for performance in a wide range of categories, with double weight given to labor and environmental performance rankings. Subcontractors are then told how they rate against other subcontractors in the same country. High scorers often garner more lucrative orders, while low scorers risk losing contracts. Nike bases these labor and environmental programs on long-standing quality control management systems for evaluating and ranking subcontractors. Requirements to improve labor conditions simply extend the scope of commitments agreed to in the code of conduct and subcontractor memorandum of understanding. Providing some evidence that this effort is earnest, Nike, Reebok, and Adidas have cancelled a handful of contracts due to poor performance and an unwillingness of these firms to change. It is hard to determine how much change has resulted from firm-led codes of conduct and monitoring. There is little research on the effects of codes and self-monitoring on actual workplace conditions since most of these programs remain confidential. Firms naturally assert that these systems respond effectively and sufficiently to labor concerns. Many companies continue to argue that they alone (perhaps with the assistance of a consulting firm) have the knowledge and ability to solve labor problems. However, judging by press reports, neither activists nor the general public put much credence in corporate self-evaluation and monitoring (Connor 2001a, 2001b). A number of prominent retailers and brands in the United States, such as Wal-Mart, have nonetheless continued to advance tightly controlled versions of self-monitoring that provide very little, if any, pub- 5   Information from interviews with staff of Nike, Reebok, and Adidas in 2000 and 2001.

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Monitoring International Labor Standards: Techniques and Sources of Information licly verifiable information. On the basis of recent cases in which codes and monitoring have been used for public relations rather than improving labor conditions, many people criticize these voluntary codes and internal monitoring for their vulnerability to corporate manipulation (O’Rourke, 2002). EXTERNAL MONITORING AND CERTIFICATION Growing public awareness and activist pressure has led to a recent proliferation of programs in the United States and Europe to establish standardized codes of conduct and systems of monitoring that are conducted by accredited third-party auditors. Three such major initiatives have emerged in the United States: the Fair Labor Association (FLA), Social Accountability International (SAI), and the Worldwide Responsible Apparel Production (WRAP) certification program. Each of these programs has a code of conduct informed largely by ILO core standards and a system for accrediting external organizations to monitor compliance with the code. A small army of monitors including accounting firms, professional service firms, and small nonprofit organizations are emerging to provide these third-party monitoring services (Bartley, 2001).6 External monitoring systems differ in key procedures for auditing (who conducts the monitoring and how), certification (whether a factory or a brand is certified), and reporting (what is publicly disclosed). Table 3-2 highlights the differences in these systems. Fair Labor Association The Fair Labor Association (FLA), convened originally by the Clinton administration in 1996 as the Apparel Industry Partnership (AIP), is both the oldest and most controversial of current initiatives to establish monitor- 6   Private, for-profit monitors include PricewaterhouseCoopers (recently spun off as Global Social Compliance), Cal-Safety Compliance Corporation, International Certification Services, Det Norske Veritas, Bureau Veritas Quality International, Intertek Testing Service, Merchandise Testing Labs, MFQ, Sandler & Travis, Centro per l’Innovzione e lo Sviluppo Economico, RWTUV Far East Thailand, Global Standards-Toan Tin Vietnam, and KPMG. Nonprofit groups include the U.S. NGO Verité, the Guatemalan Commission for the Monitoring of Code of Conduct, the Independent Monitoring Group of El Salvador, Phulki (a Bangladeshi NGO), and the Honduran Independent Monitoring Team.

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Monitoring International Labor Standards: Techniques and Sources of Information TABLE 3-2 U.S.-Based Nongovernmental Monitoring and Certification Systems Standard Fair Labor Association (FLA) SA8000 Worldwide Responsible Apparel Production (WRAP) Scope Apparel and footwear companies; licensees of affiliated universities. Factories producing a wide range of products. Apparel industry. Governance 12-Member board with 6 industry representatives, 5 NGOs, 1 university representative. Governing board has 5 members, composed of 1 representative from Council on Economic Priorities, 3 lawyers, and 1 business person. SAI also has an advisory board with more diverse membership. Board of 3 officers and 8 directors form the Independent Certification Board, primarily industry representatives. Monitoring process Companies must conduct internal monitoring of at least one-half of their applicable facilities during the first year and all of the second year. Companies commit to use independent external monitors accredited and selected by the FLA to conduct periodic inspections of at least 30 percent of their facilities during their initial 3-year participation period. Manufacturers or suppliers are granted the status of “applicants ” for 1 year until they are verified by an accredited certification auditor. The SA8000 certificate must be renewed every 2 years. Specially trained local audit teams will be briefed by local NGOs and unions,speak to managers and workers, and check the records of the factories. The SA8000 “guidance document ” is the Factories must undergo a three-step process: self-assessment, independent monitoring, and final review and follow-up. Factories contract and schedule selected independent monitors to perform on-site evaluations. Based on this evaluation, the independent monitor will either recommend that the facility be certified

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Monitoring International Labor Standards: Techniques and Sources of Information evaluate nongovernmental monitoring remains a critical area for future research. However, there is some evidence from programs in the United States, and from sporadic reports from monitoring initiatives around the world, that can provide a beginning for evaluating nongovernmental monitoring. For instance, more than 60 companies have signed agreements with the U.S. Department of Labor to conduct factory monitoring, and hundreds of other companies are conducting monitoring on their own. Private monitoring firms conducted more than 10,000 audits of garment shops in Los Angeles alone in 1998, which is about 10 times the number carried out by state and federal authorities (Esbenshade, 2000). Although this monitoring is generally unsystematic, with little oversight, no transparency, no sanctions for poor monitoring, and potential conflicts of interest of monitors, somewhat surprisingly, it has actually led to increased levels of compliance. As Esbenshade (2000, p. 5) reports: Monitoring has significantly raised the rate of compliance in the industry. The rate of compliance rose 20 percent between 1994 and 1996, in part due to the proliferation of monitoring. In 1998, DOL statistics indicate that the rate of violations in non-monitored shops is twice as high as in monitored ones. However, the data also demonstrate that while monitoring helps, it has far from solved industry’s problems. Fifty-six percent of monitored shops are still violating labor laws. Many of the initiatives described above are still too new to evaluate fully. The FLA has only recently begun its external monitoring program. The FLA has, however, established a complaint response system and is developing remediation strategies when problems are identified. For instance, in response to a third-party complaint submitted by Nike, the FLA sent a team to the Dominican Republic to assess a labor dispute at the BJ&B cap factory in January 2002. Workers alleged freedom of association violations when 20 workers were fired from the facility after having signed a petition to form a union. Within 24 hours of receiving the complaint, FLA compliance staff were on location and conducted unannounced factory visits, offsite interviews with workers, and a review of facility payroll, personnel, and timecard records. WRC staff also participated in this inspection. The dispute was resolved within several weeks. As noted above, SAI has certified 236 factories to meet the SA8000 standard. SAI staff assert that member companies have conducted more than 2,000 audits of supplier factories in preparation for these certifica-

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Monitoring International Labor Standards: Techniques and Sources of Information tions. SAI has also conducted a number of auditor, supplier, and worker trainings around the world. To date, more than 1,100 people in 19 countries have taken SAI’s supplier training course. SAI is also working with the International Textile, Garment, and Leather Workers Federation to support workers in 12 countries across Latin America, Africa, and Asia on increasing worker involvement in workplace standards and monitoring systems. Transparency remains, however, a major issue in the evaluation of such systems. There are obviously a number of weaknesses and challenges to making these different monitoring and reporting systems effective. Nongovernmental monitoring faces many of the same mundane challenges as traditional government monitoring and enforcement, including coverage, training and capacity of inspectors, incentives of monitors, corruption, etc. The long and mobile nature of apparel supply chains, which has strained traditional monitoring, also makes nongovernmental monitoring extremely challenging. The Gap alone receives goods from 4,000 factories in 55 countries, the number for Disney is estimated at more than 30,000 factories, and Wal-Mart from even more (Wach and Nadvi, 2000). The ability of firms to move production quickly among factories and to hide behind multiple layers of ownership make systematic inspections extremely difficult.18 A number of critics have raised concerns that nongovernmental factory visits are too infrequent to evaluate normal day-to-day operations. “Parachuting” monitors are able to identify the most obvious problems but may miss many of the largest issues and are not around long enough to actually solve problems (O’Rourke, 2002). Critics surmise, quite reasonably, that NGOs will not be able to duplicate national labor inspectorates as they cannot provide full coverage for all factories (Justice, 2001). There are also concerns about how many workers these systems can actually reach. Many markets—such as informal-sector production, business-to-business commodities, and production for domestic consumption in developing countries—lack consumers who focus on social responsibility issues. As Pearson and Seyfang (2002) have argued, voluntary codes and monitoring primarily influence “enclaves” in the global economy rather than applying universally. Nongovernmental systems focus on workers in 18   One ETI firm commented, “I can know my supply chain at 9 a.m., then by 10 a.m. it’s all different” (Ethical Trading Initiative, 2001, p. 7).

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Monitoring International Labor Standards: Techniques and Sources of Information first-tier suppliers and often at large-scale factories. They rarely reach down to informal-sector or home-based workers (Lee, 1997; Brill and Tate, 2002). Nonetheless, these systems do appear to reach workers that are currently not being served by traditional labor regulation. Codes and monitoring also entail fairly complex technical and social issues. Consulting and accounting firms and NGOs need extensive training to adequately play the role of industrial hygienists or experts on wages and hours. Counting on private actors or NGOs to provide these skills assumes that they, or the firms being monitored, will assume the cost of training and conducting rigorous inspections. Even if nongovernmental monitoring can overcome these critical implementation challenges, a number of deeper concerns remain. Critics fear that nongovernmental monitoring will provide public relations cover to brands, may confuse consumers with a proliferation of labels and claims, and may have unintended negative effects on workers in developing countries (Liubicic, 1998). Another critical concern is that nongovernmental monitoring may be helping to privatize governmental monitoring. Some critics warn that companies are controlling these processes, coopting NGOs by changing them from watchdogs to “partners,” and undermining strong local laws and unions (Justice, 2001, p. 6). Having NGOs play the role of regulators may also ultimately undermine traditional regulatory processes (Nadvi and Wältring, 2001; International Labour Organization, 1998). Others fear that elected governments are actually ceding some of their sovereignty to consumers through these systems. Clearly the shift to nongovernmental monitoring focuses more attention on consumers (rather than the state or unions) as the key constituent of monitoring and enforcement. Some critics also argue that monitoring, when it is conducted by local NGOs, can impede unionization or otherwise crowd out the efforts of local workers’ organizations. Compa (2001, p. 30) discusses several cases in Central America where NGOs appear to be “supplanting the unions’ role as worker representatives by discussing wages and working conditions with factory managers,” a process that will actually help “powerful companies to avoid union organizing, enforceable collective agreements, and government monitoring.” Others in Central America disagree with this assessment, arguing that NGO monitoring has supported union campaigns in El Salvador and Guatemala (Quinteros, 2001). The Kukdong case in Mexico highlights the potential of a coordinated union-NGO, north-south strategy. Cooperation between local workers, the AFL-CIO, NGOs, student activists, the FLA, and the WRC supported the formation of an independent

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Monitoring International Labor Standards: Techniques and Sources of Information union, the signing of a new contract with Korean management, and important gains in pay and health and safety conditions (Brown, 2001). The spotlight of monitoring was useful in this case to protect fledgling union organizing. Nonetheless, the debate in Central America underscores the reality that NGOs and unions continue to be wary allies and need to develop (Compa, 2001). A number of critics have also noted that codes and monitoring can hurt workers (Esbenshade, 2001; Liubicic, 1998). Monitoring reports can lead firms to cut contracts with poorly performing factories, leading to job losses. Firms may reduce overtime at a factory to comply with a code of conduct, despite workers’ needing these wages to survive. Workers may also be punished after complaining to auditors, as these systems often have limited protections for workers who complain. Even when monitoring is effective, some of the most hazardous jobs may be shifted further down the supply chain or into the informal sector to avoid the selective gaze of nongovernmental monitoring. There are also many problematic versions of nongovernmental monitoring. For example, in one recent evaluation, Global Social Compliance (formerly PricewaterhouseCoopers), a monitor for many large multinational corporations, was shown to depend largely on data provided by management and to conduct very cursory inspections of factories (O’Rourke, 2002). Worker interviews were conducted inside factories, so factory managers knew who was being interviewed, for how long, and on what issues. This kind of monitoring can miss major issues in a factory, provide a false impression of performance, certify that a company is “sweat-free” on the basis of very limited evidence, and actually disempower the workers it is meant to help. While there is no single perfect way to monitor a factory, there are clearly better and worse monitoring practices. CONCLUSIONS Despite a number of problems and challenges, new nongovernmental monitoring systems have the potential to generate valuable information for the evaluation of compliance with international labor standards. As these systems are focused primarily on factory- and brand-level evaluations, they offer potentially very detailed information on the context of manufacturing practices in a particular country, providing ground-level information to complement national-level data on labor standards performance. Since these systems now generally only analyze the suppliers of western brands

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Monitoring International Labor Standards: Techniques and Sources of Information and retailers, they generate information that might be considered “best practices” in developing countries. All of these types of information can be useful and complementary for broader national assessments of compliance with labor standards. Questions remain, however, on how to move these systems towards more credible and complete global coverage. Can these systems be implemented beyond the first tier of suppliers? Can improved practices “spill over” into firms not directly tied to high-end global supply chains? Can southern stakeholders be brought into discussions and have a real say in the structure and implementation of these programs? Can mechanisms of representation and democracy be formalized in these nongovernmental systems? Can these systems provide workers and their advocates real tools that will increase their ability to organize? Is it possible to move toward interoperable systems of standards and monitoring? Can the ILO be brought more fully into nongovernmental monitoring? And ultimately, can these new forms of monitoring be designed to complement and support existing regulatory processes? In some regards, past distinctions between official and unofficial systems are beginning to break down. There is some convergence under way in codes and monitoring regimens that is blurring the boxes presented in this chapter. Factory monitoring sometimes includes union officials. Supply-chain monitoring is using NGOs to monitor factories. And NGO investigations are sometimes coordinated with powerful brands. Nonetheless, there are still critical distinctions among these systems on such issues as the roles of workers and advocacy organizations, transparency of results, and strategies for remediation of problems. And there is certainly no guarantee that voluntary codes of conduct and monitoring schemes will naturally converge on more complete or democratic systems of monitoring and reporting. They are just as likely to diverge into a plethora of competing initiatives, serving to only confuse the public and undermine the credibility of nongovernmental initiatives. However, with strategic policies and coordinated efforts, nongovernmental monitoring could instead move toward more credible, transparent, and accountable systems. And this monitoring and reporting could be designed to complement existing government data. One promising avenue would involve efforts to increase transparency among these systems, in order to learn more about conditions in factories around the world and more about monitoring methods and certification processes. This approach would also facilitate better comparison across pro-

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Monitoring International Labor Standards: Techniques and Sources of Information grams. The different models of nongovernmental monitoring are effective at different processes. Factory monitoring identifies willing factories and gives managers information to support change. Supply-chain monitoring helps move standards to outsourced chains of production and provides brands with information to better manage their suppliers. Independent investigations help to expose the worst actors, provide information to workers, and create incentives for brands to prevent problems in their contractors. Connecting these different types of information in some comparable way might help to overcome the challenges of access, scope, and credibility of nongovernmental monitoring. Several new initiatives are currently being developed that might respond to this challenge. A coalition of NGOs in Europe and Australia (led by the Clean Clothes Campaign and Oxfam-Aid Abroad) are developing a comparison and rating system (which they call the “Human Rights Marathon”) that would evaluate and compare firm performance and monitoring systems. Monitoring systems that are more transparent would receive higher ratings. In the United States, the Lawyers Committee for Human Rights is working to develop a public comparison system for labor performance, modeled at least in part on the environmental comparison website.19 Both of these initiatives would advance transparency and comparability of codes and monitoring programs. RECOMMENDATIONS Each of the existing nongovernmental regulatory monitoring systems has weaknesses and challenges. Nonetheless, under certain conditions, nongovernmental monitoring can influence factory labor practices. With increased transparency, improved technical capacities, and new mechanisms of accountability to workers and consumers, nongovernmental monitoring could complement existing state regulatory systems. As they develop, nongovernmental regulatory systems should be evaluated along a number of criteria: legitimacy—Are key stakeholders involved in all stages of standard setting, monitoring, and enforcement? 19   See http://www.scorecard.org [October 16, 2003].

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Monitoring International Labor Standards: Techniques and Sources of Information rigor—Do codes of conduct meet or exceed ILO conventions and local laws? Are standards measurable? Is monitoring technically competent? accountability—Is monitoring independent and transparent? complementarity—Do nongovernmental regulatory systems support state monitoring and processes to learn and improve standards and monitoring methods? Regulation in the global economy remains a daunting challenge. If these experiments in nongovernmental monitoring can be made more transparent, accountable, and democratic, it may be possible to build them into an important complement to existing labor regulation. At a minimum, nongovernmental monitoring and reporting offers a glimpse of emerging strategies to monitor global supply chains and to begin the process of building new systems for a fast-changing world. 3-1 The committee recommends that nongovernmental monitoring organizations—including internal corporate systems and external systems operated by NGOs or other organizations—work together to develop transparent methodologies and measures of performance that allow comparison. 3-2 The committee recommends that external monitoring organizations make their data, auditing methods, and findings public. REFERENCES Arthurs, H. (2001). Reinventing labor law for the global economy: The Benjamin Aaron lecture. Berkeley Journal of Employment and Labor Law, 22(2), 271-294. Ascoly, N., Oldenziel, J., and Zeldenrust, I. (2001, May). Overview of recent developments on monitoring and verification in the garment and sportswear industry in Europe. Amsterdam: SOMO–Centre for Research on Multinational Corporations. Ayres, I., and Braithwaite, J. (1992). Responsive regulation: Transcending the deregulation debate. Oxford, England: Oxford University Press. Bartley, T. (2001, August). The professionalization of scrutiny: The rise of labor-standards monitoring organizations. Paper presented at the American Sociological Association 2001 conference, Anaheim, CA. Bendell, J. (2001, September). Towards participatory workplace appraisal: Report from a focus group of women banana workers. Bath, England: New Academy of Business. Benjamin, M. (1998). What’s fair about the Fair Labor Association (FLA)? Available: http://www.sweatshopwatch.org/swatch/headlines/1998/gex_fla.html [November 20, 2003]. Bernstein, A. (2001, November 19). Do-it-yourself labor standards: While the WTO dickers

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