By Anita Roddick

The Sweatshop Chapter

Anita: The terrible truth is that if nobody is watching and there are no enforceable international regulations about how we should do business – then even the cleanest and squeakiest corporations can transform themselves, almost unnoticed, into a force for evil. And if you peer into the sweatshops around the world, as I have – some of them well-lit, modern, and apparently civilized factories – you can see the by-products of an inhuman system. Charlie Kernaghan has seen more than most people. That’s why he’s one of the most potent voices against exploitation in the world…

How is it that so many giant companies, household names like Nike and Wal-Mart, have prospered so dramatically over the past decade whilst sweatshop workers from China to Nicaragua continue to be exploited?

Take, for example, the Indonesian workers who have been making Nikes for the past ten years. In 1991, they were paid US $0.45 per day, not enough to meet basic physical needs. Today, their inflation-adjusted wages are little better and mean that their living standards often remain as wretched as they were a decade ago. Nike, on the other hand, has tripled its annual revenues over the past ten years from $3 billion in 1991 to $9 billion last year. CEO Phil Knight got paid $3.2 million in cash last year, bringing his net worth to well over $5 billion and making him one of the richest men in the world. Despite the fact that Nike, giving in to pressure from human rights groups, issued a statement in 1998 promising to improve conditions for the 500,000 employees of their contractors, many claim that the situation has not significantly improved and the reality is but a shadowy reflection of that promise. Sweatshop workers are still being exploited and companies like Nike need to do far more to improve the situation.

Or take the Chinese workers who make Kathie Lee Gifford handbags sold by Wal-Mart, the world’s largest retailer. A leading human rights watchdog discovered a factory in Zhongshan City in 2000 where workers for Wal-Mart’s contractor are forced to put in

14-hour shifts, seven days a week, 30 days a month. They are effectively held as indentured servants in overcrowded dormitories. At the end of the month nearly half of them owe the company money – to cover two dismal meals a day and pay deductions for talking to co-workers while sewing.

Over half of Wal-Mart’s imports come from its contractors in China. Wal-Mart, like Nike, have argued that they do not permit their goods to be produced under sweatshop conditions and point to their requirement that suppliers sign a code of basic labor standards. They claim that when this has not been adhered to they have withdrawn production from that supplier. However, in February 2001 they were struck off the KLD Domini 400 “socially responsible” register, on the grounds that they had failed to ensure that their suppliers operate factories that meet adequate human rights and labor standards.

By Charles Kernaghan

Why does this happen? Why does it continue? The answers: the culture of “profits before people” and in some cases government collusion. Many companies scour the globe to find the cheapest labor possible. They play countries off against each other in a bidding war for production contracts. In what has been dubbed “a race to the bottom,” the winning contractors and governments are the ones willing to reduce their workforces to levels of pay and working conditions that strain human endurance to the limit. Some governments turn a blind eye to labor law violations, and the international human rights treaties they have ratified, and instead leave workers with little choice but to fall in line.

Take Indonesia, where human rights observers have noted the presence of army units inside some of the factories where Nike’s shoes are made. Or Nicaragua, where workers were indicted by their government on charges that carry sentences of up to ten years in jail. Their crime: asking for an $0.08 increase per pair of blue jeans they assemble for retailers including Wal-Mart – jeans that sell in the US for $30 per pair.

Meanwhile, the accounting firms that companies (including Nike and Wal-Mart) use to monitor their factories – supposedly to ensure observance of international standards and corporate codes of conduct – often miss violations because their monitoring efforts are significantly flawed. Dr O’Rouke of MIT claims that auditing giant PriceWaterhouse Coopers, in its audit reports, failed to recognize workers’ rights and, in some cases, overlooked serious violations of health and safety standards. Although PWC officials argue that their monitoring uncovered violations of minimum wage, overtime and safety laws, their shortcomings clearly indicate inadequate procedures.

When business journalists caught Wal-Mart lying in its denial of any connection to one particularly dreadful factory, the company’s vice-president explained that it was because they were “defensive” about the sweatshop issue. Sweatshops are, indeed, indefensible. They insure that the great wealth created by the global expansion of trade and investment – touted by pundits the world over as the cure for poverty – remains with top corporate executives and shareholders while millions of workers barely survive.

Charles Kernaghan is the executive director of the National Labor Committee, an independent, non-profit organization focussed on the protection of worker rights.

I work sixteen hours a day for a top shoe manufacturer I get paid $50,000 per week

I work sixteen hours a day for a top shoe manufacturer I get paid $15.00 per week

Anita: What’s a days work worth? Ask yourself that while you compare a corporate CEO’s compensation with the daily wage of third world workers.

The Race to the Bottom
By Charles Kernaghan

CEO vs Workers Compensation:
A sample of starvation wage around the world

Hourly take home pay:

Guatemala  37¢
El Salvador  60¢
Nicaragua   23¢
Honduras  43¢
Haiti     30¢
Mexico 50¢
China   28¢
Indonesia  20¢
Bangladesh  13–20¢
Romania  17–37¢
Russia  11–56¢
US sweatshop  $3–$4
US territory of Saipan  $3

CEO 1998 Compensation
(includes salaries, stock options, bonuses)

Millard Drexler, GAP $660 million
Phil Knight, Nike  $3 million
David Glass, Wal-Mart  $40 million
Wal-Mart’s Walton
family is now worth $67.5 billion
Nike’s Phil Knight is worth $5.8 million

Can anyone live on these starvation wages?

The companies say, yes, for example, 60¢ an hour is a living wage in El Salvador, sufficient to raise a family. After all, El Salvador is not New York City.

We asked women workers who sew Nike garments in El Salvador if this was true. Could they survive on 60¢ an hour?

“No, it’s impossible,” they told us. “It’s a lie when the companies say that.”

Then they talked us through their daily expenses:

For an 8-hour day they earn $4.79

It costs them 68¢ a day for a round trip bus fare

A small breakfast – rice, beans, tortilla, and coffee is 80¢

A modest lunch – rice, beans, and tortillas again, a scrap of chicken and lemonade, since they can’t afford soda, comes to $1.49.

So, just getting back and forth to work and surviving costs them $2.97, leaving just $1.82 out of their daily pay of $4.79. The workers live in one-room hovels, 10 by 12 feet, sharing an outhouse and common sink with several other families. For this they pay $31.40 per month, $1.03 a day. That now leaves them with just 79¢ at the end of the day.

What do they do now? The cheapest supper for a family of three costs at least $1.14 – for rice, beans, tortillas, and coffee, and maybe the family splits a plantain. But they do not even have enough money for this. What about daycare, which costs $1.13 per day, or a child’s new shoes which cost $8.00?

Women sewing expensive $75 Nike shirts are forced to raise their children on coffee and lemonade, since they cannot afford milk. No one can live on 60¢ an hour in El Salvador. It is a starvation wage. To climb out of misery and into poverty, the workers would need to earn at least $1.18 an hour. What would happen if Nike paid its workers $1.18 an hour rather that the current 60¢ wage? Would the sky fall in on corporate profits?

Hardly. At the 60¢-an-hour wage, the women are paid 20¢ to sew each $75 Nike shirt. At $1.18 an hour, the workers would be earning 391/2 cents for every $75 Nike shirt they sewed. This means their wages would still come to less than half of one percent of the retail price. Nike could surely afford that.

But is does not have to be that way

  We can fight back

  We can remake our economy with a human face

  We can hold the corporations accountable to respect human and worker rights and to pay a living wage.

This is not a boycott

It is the opposite. This is a struggle to keep jobs in the developing world, but jobs with dignity, justice, and fair wages.

We are winning!

Last year the companies said they would never agree to public disclosure, but that is exactly what university students have won on over a dozen campuses across the US including University of Michigan, Duke, and Georgetown. If a company wants to manufacture goods for these universities, it must now publicly disclose the names and addresses of its factories.

Today there is an active social movement of labor, religious, student, solidarity, and community organizations across the US, working together to end child labor and sweatshop abuses. Just five years ago, this movement did not exist. We have all come a long way.

Charles Kernaghan

JC Penny, Victoria’s Secret, IBM, Toys R Us, and TWA are among the US corporations that have profited by employing prisoners. Put together long mandatory sentences for minor drug offences, a strong racial bias, prisons run by corporations for profit, the sale of convict labor to corporations, and a charge for prison room and board and you have a modern system of bonded labor – a social condition otherwise known as slavery.

The National Labor Committee
The Worker Rights Consortium
Sweatshop Watch
Clean Clothes Campaign
Free The Children
Alliance For Childhood
Anti-Slavery International
Human Rights Watch
International Labour Organization

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