The only means for workers to improve their working conditions is to join together as a group

The only means for workers to improve their working conditions is to join together as a group

The efforts of multinational brands, retailers and importers to impose minimum wages and better working conditions in their supplier factories, while good in the short run, will result in greater problems in the long run, says David Birnbaum. Instead, he proposes that customers who want to raise worker standards in their supplier factories must find a third way forward.

Recently some of the more advanced importers have begun to create and impose a new system of compliance, one not based on government labour laws but rather one that is fair for both workers and factory suppliers. This includes minimum wages and minimum ages for workers. These steps will benefit all parties — customers, factories and workers. Everybody benefits:

  • Factories benefit by avoiding costly strikes;
  • Workers benefit by receiving higher wages and better working conditions;
  • Customers benefit by ensuring an uninterrupted flow of shipments.

However, this new customer imposed system of compliance, also creates a new fundamental problem.

There is an underlying paradox

As individuals, workers have no power. Their only means of improving their working conditions is to join together as a group, to negotiate as a collective. Unions exist as a means to provide collective bargaining: the greater the collective, the greater the power.

The threat of industrial action is the single most important tool in the collective bargaining process. In many cases it is the only tool.

Workers recognise that industrial action causes serious disruption to everyone, including the striking workers themselves. Virtually everyone — management, government and media — stand against them. During the strike, workers receive no wages to support their families. They also run the risk of personal injury and even death, and because people are inconvenienced, the general public is upset. At the outset of the union movement, workers take these risks because they have no alternative.

However, when the customer imposes worker benefits directly on the supplying factory, industrial action becomes unnecessary. Collective bargaining becomes unnecessary. The union becomes unnecessary. Why fight when somebody is already fighting on your behalf, particularly when that somebody is far more powerful than the factory management?

Several months ago, a union leader was beaten-up in a parking lot outside a Bangladesh factory. This was a very large factory, employing 24,000 workers. The next day VF Corporation pulled all its orders out of the factory. The message was clear: VF to Factory: either change your ways or we and our friends will put you out of business.

Companies such as VF Corp, H&M, Adidas and others are leading the way. Workers, at least in their supplier factories, will receive the benefits to which they are entitled, without disrupting production which results in shipment delays.

The problem is that by forcing change, the customers have made collective bargaining unnecessary which, in turn, makes the unions unnecessary. This will invariably lead to greater instability as:

  • The workers are yet again excluded from these negotiations;
  • Any agreement reached without worker agreement has little value.

The customer’s power over the factory supplier is the threat of taking their orders elsewhere. In this sense the factory management is forced to accept customers’ demands. However, there is an important corollary: the factory supplier that accepts customer demands and acts in good faith will continue to receive the orders.

But this may not be true because the agreement between customer and factory may not be enforceable.

Imagine a situation where the customer and supplier factory management hammer out an agreement over wage increases. Imagine a situation where the workers do not accept the agreement and resort to industrial action. Going to the workers to force them to accept the new wage scale fails. The strike continues. If the customer pulls existing orders out of the factory, the whole system of customer/factory settlements falls apart. Why should a factory be forced to enter into an agreement with the customer when the factory cannot enforce the agreement in the first place?

The resolution: a new continuous mediation process.

Rather than directly entering into dubious agreements with factory suppliers, it may more sensible for the customer to stand back and allow factory management and organised labour to work out their own agreement. In the event that no agreement is reached, the customer can mediate. This would be a far more practical approach.

There are difficulties, but these can be overcome:

  • Many factories are opposed to serious negotiations with unions: The customer can force negotiations, by threatening (as they did before) to pull their orders.
  • Many union leaders do not have the knowledge necessary to manage their union and/or are totally corrupt: The customer can work with international unions such as Solidarity or the TUC that already have offices throughout Asia, to help clean up existing unions and train union leaders.
  • Most importantly, importers must collaborate to create a viable system.

The new continuous mediation process will not be easy. Some importers may not be willing to participate. Companies such as H&M and Inditex have go-it-alone reputations. Hopefully, as they see the failure of their current efforts, they will see the benefits of collaboration.

Click on the following link to read David's first article, which sets the scene for Asian union development and the Western response.

Separately, this week the IndustriAll global union said it is working with major clothing brands in a process known as ACT to create a system that can increase wages in a sustainable and enforceable way by developing new models of cooperation: New approach to garment industry living wage.