Monitoring in the Dark

To: WRC Affiliate Universities and Colleges
From: Scott Nova and Ben Hensler
Date: February 25, 2013
Re: Monitoring in the Dark – WRC/Stanford Law School Report Finds

Critical Flaws in ILO Factory Monitoring Program in Cambodia
Last week, the WRC and Stanford Law School’s International Human Rights and Conflict Resolution Clinic released an in-depth joint report, available here, on the International Labor Organization’s (ILO) Better Factories Cambodia garment factory monitoring program (BFC). The report was based on field research conducted by the Stanford clinic, in conjunction with the WRC, over three separate trips to Cambodia in 2012.

The subject is an important one, both because the presence of the BFC over the last decade is often credited with helping make Cambodia’s garment industry a “success story” in addressing sweatshop abuses, and because, on the strength of this purported success, other ILO “Better Work” factory monitoring programs modeled on BFC already have been launched or proposed in many other garment-exporting countries, including Haiti and Bangladesh. The WRC-Stanford report, Monitoring in the Dark, critically evaluates the BFC program – both in its impact on Cambodia’s labor rights environment during its decade of operation, and in its methodology and practices as a factory monitoring and reporting body.

The report finds that in spite of the considerable positive attention BFC has received over the past decade – and the considerable funding it had received from the U.S., other governments and international agencies – the program has failed to deliver on its promise. First, the report observes that while the first half of the last decade did see some progress for worker rights in the Cambodian garment sector (particularly in minimum wage enforcement and the ability to form unions), in several crucial aspects, the labor rights environment has actually worsened in the period that BFC has been in operation:

Wages for Cambodian garment workers actually fell in real terms during BFC’s first decade of operation – by nearly 17% between 2000 and 2011 – even as they rose in some other garment producing countries in the region, such as Vietnam and Indonesia, which during nearly all of this period did not have ILO monitoring programs.

This wage stagnation has been a function, in part, of the fact that the increased prevalence of unions in Cambodia’s garment industry has, by and large, not resulted in genuine collective bargaining between workers and factory owners – because many unions are mere appendages of factory management or political parties and those that are not often face violent repression (for example, see WRC’s recent report on E Garment, here).

Workers’ lack of bargaining power is also related to factory owners having, during this period, shifted nearly their entire workforces to short-term employment contracts – a negative development BFC initially publicly criticized, but then muted its opposition to, apparently due to pressure from the Cambodian government and factory owners (for an in-depth look at this issue see a WRC-commissioned 2011 report by Yale Law School’s Lowenstein International Human Rights Clinic, here).

By some basic measures – such as the prevalence of excessive overtime work and other unhealthy working conditions – noncompliance with Cambodian law and buyer codes of conduct remains rampant, with BFC’s own data consistently reporting that most are factories violating the law.

As a result of all these factors – declining wages, insecure employment, excessive hours and unhealthy conditions – many Cambodian garment workers face a very difficult situation, one symptom of which may be the repeated incidents of mass fainting which have occurred in the country’s garment factories over the past several years.

The report goes on to suggest that BFC’s failure to effectively address these issues over the past decade may be related to significant flaws in its practices and basic approach:

The program’s governance by an oversight body that is mostly made up of government and industry officials (and, too often, union leaders beholden to both) has led BFC to protect the interests of factory owners, often at the expense of protecting worker rights.

As a result, since roughly 2005, the program has become increasingly less transparent in its public reporting of factory conditions and much less responsive to factory workers – BFC now no longer publicly identifies which factories are violating the law, and has even stopped sharing information about its findings with the workers at the factories it inspects.

Surprisingly, BFC has no formal complaint procedure or mechanism by which workers can report violations in the factories where they work and be assured of any kind of response from the program – a minimum measure of accountability to the garment workers the program is supposed to benefit.

Most importantly, the program neither imposes nor incentivizes any accountability on the part of the retailers and brands whose buying practices so strongly influence conditions in the industry. BFC sells its inspection reports to buyers on a completely confidential basis – there is no way for the public to know whether or not particular brands and retailers are even buying BFC’s inspection reports on their supplier factories, much less whether or not they are doing anything to correct the violations found there.

Finally, the report makes several recommendations about reforms that BFC should adopt in order to be a more effective agent of progress on labor rights and factory conditions for Cambodian garment workers, including that:

The program must become significantly more responsive and accountable to factory workers and worker representatives – it should implement a functioning complaint system, engage with them away from the worksite as part of its inspection process, and consult with them regarding the remediation of violations;

BFC should be much more transparent in its reporting concerning factory conditions – it should share the results of its inspections with workers and worker representatives, and, after giving factory owners and buyers the opportunity to correct violations, issue public reports concerning its findings and any resulting corrective actions at each factory it inspects.

The program should focus its reporting on overall labor rights trends in Cambodia’s garment industry on those issues most significantly affecting factory workers, even if this exposes some uncomfortable truths for factory owners – this would mean reporting, for example, the share of factories employing most of their workers on temporary contracts, the impact of price inflation on the buying power of prevailing wages, or incidents where factory-level union leaders have been victims of violence (all of which BFC has failed to include in its public reporting in the past).

The WRC is hopeful that this report will achieve these goals and, as with the exposure of the flaws in other factory-monitoring initiatives that has emerged from the recent factory fire tragedies in South Asia, will help refocus attention on the importance of independence, transparency and accountability of brands and retailers as essential elements of any effective monitoring program.

Scott Nova
Worker Rights Consortium
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Washington DC 20005
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www.workersrights.org