Industry Paper
Li Li
Labor rights in the fashion industry
The product life cycle of the clothing begins with design, raw material, fabric production, manufacturing, transport and finally to the hands of the consumers. Because of the complexity of the industry, there are many key CSR issues involved, such as the quality of the cotton used, waste management and environmental impact of the production. For the purpose of this paper, I would focus on the labor issue. The fashion industry could be either vertically or horizontally integrated with different parties involved at different stages. Most of the clothing companies do not own the factories. They are mostly the retailers who own the stores or sell their products in department stores. This makes it hard to monitor all the suppliers, as the clothing companies do not have direct control over these often out-sourced productions. The actual cotton production and manufacturing usually take place in developing countries where laws and regulations are not fully established yet. The stakeholders involved include the customer, community, employees, supplies, industry peers, policy-makers, NGOs and investors.
The key players in the industry range from high-end fashion designers such as LVMH and Ralph Lauren to the lower spectrum chain stores such as H&M and Zara. These companies all have strong power influencing the market, as they are the ones who place orders in factories located in the less developed countries. There is no doubt that the fashion industry is highly competitive, especially during the economic crisis. Companies of all kinds aim to cut costs and increase market share to maximize profits as consumers have less disposable income to spend. This poses problems as extreme cost saving may lead to violation of labor rights in the cotton plantation or manufacturing factories.
With regards to labor issues, the raw material, fabric production and manufacturing stages are of major concern. The fact that these companies do not own the factories make it hard to monitor the suppliers’ compliance with the companies’ code of conduct. Companies need to tackle the issue of fair wages or safe working conditions together with the suppliers. For instance, H&M just came out with its Conscious collection. One of the key initiatives is to choose and reward responsible partners. The CEO of the company specifically points out that “our vision is clear. All our operations should be run in a way that is socially responsible.”
However, just last month, in October 2012, H&M was accused of under-paying the Cambodian workers. A Swedish documentary was released reporting that the laborers were paid only $.45 per hour. H&M responded by saying that they paid above the minimum wage required in the country and “the wage the least skilled workers in the factories earn, it is decided by the local government.”(Helena, http://about.hm.com/content/hm/NewsroomSection/en/NewsRoom/NewsroomDetails/sustainability-update-23102012.html) H&M is now working on raising the wage directly with the factories to ensure better living condition for the workers. H&M introduced a new system called Full Audit Program to improve on their audit system and to better assess the performance of their suppliers. H&M tries to strengthen the auditing by tackling the issue of freedom of association. Collaborating with local NGOs, H&M developed a series of five short films, supported by training packages. The films cover some of the key issues covered by their Full Audit Program, namely maternity leave, leave and documentation, abuse and grievances, health and safety and overtime, all aiming towards increasing wages and working condition. “Through short films, more than 440,000 workers in Bangladesh have received training on their rights at work since 2008. Our aim is therefore to influence the wage issue such that the minimum wage is increased to a level that represents a living wage," a company