EYE OF THE NEEDLE

Kellwood's taking fashion forward by making virtually all our clothes in the Third World. But the St. Louis giant carefully cloaks its operations, its plant locations and its monitoring of labor conditions.

So why did the Council on Economic Priorities, a 30-year-old socially responsible research firm based in New York, give Kellwood a lousy "C" when they graded its corporate code in 1997? Well, for starters, that code's a little vague. Governmental, labor and human-rights guidelines consistently suggest 48 hours per week and 12 hours of overtime as maximums. Kellwood's code simply says suppliers must operate "based on prevailing local work hours," with overtime set "according to local labor laws." Instead of mandating at least one day off each week, Kellwood's code only suggests a "reasonable" time off. And it doesn't even require such basic amenities as fresh water, ventilation and clean bathrooms.

As for pay, Kellwood mandates the legal minimum wage. In Sri Lanka, that's about $38 a month; in Indonesia, it's about $17 a month, despite the recent 70 percent inflation. In Haiti, minimum wage is 36 gourdes a day -- which, after breakfast, lunch and bus transportation, leaves 2 gourdes (about 12 cents U.S.) for shelter, health care, clothes, schooling, child care and the evening's dinner.

Kellwood's code does say it won't condone any type of harassment, abuse or corporal, mental or physical punishment, an admirable blanket statement that covers the screaming as well as the sexual harassment and forced intercourse common in many overseas factories. But because Kellwood won't allow outsiders to inspect, won't release its own inspection reports and won't answer questions about monitoring procedures, it's hard to feel comforted.

In its most recent addition to the code, Kellwood says it expects business partners to respect employees' lawful rights of free association. It doesn't mention that virtually none of Kellwood's own employees is unionized, and it doesn't make any provision for employees in countries where unions are illegal, corrupt or hamstrung. A recent report released by the New Economy Information Service think tank notes that U.S. corporations are choosing authoritarian or only partly democratic countries for their manufacturing: Wages tend to be lower and workers more docile. Unions don't fly well in such places; either they're illegal in the free-trade zones (Bangladesh), or the military cracks down (Indonesia); or they're too weak to raise their voice above the din of poverty (Haiti). In China, the only legal union is led by a member of the ruling Communist Party. In Mexico, the U.S. State Department found registered unions run by extortionists falsely claiming to represent workers.

Posting employees' rights in their own language, as Kellwood promises it does, is indeed a huge step forward. Unfortunately, almost 74 percent of women in Bangladesh are illiterate. In Honduras, more women can read, but they often have to cross huge distances to eat or go to the bathroom, and if they do take a second to stand at the bulletin board, it's politically suspect. In Honduras last year, the U.S. State Department found "credible reports, particularly in the Export Processing Zone sector, that some inspectors had gone so far as to sell the names of employees involved in forming a union to companies that then dismissed union organizers before the Ministry could recognize the unions." In Haiti, where 50 percent to 75 percent of the population is unemployed or underemployed, anti-union sentiment runs high. "Workers are afraid just to talk to each other about unions," explained Denestant. "They don't know who is going to be the traitor. Also, Haiti has many people involved in drug trafficking; your manager might be involved with drug dealers who can threaten you."

In a 1996 survey of 42 U.S. apparel companies sourcing overseas -- including Kellwood -- the Labor Department's international team visited El Salvador, the Dominican Republic, Honduras, India, the Philippines and Guatemala. They found that "relatively few workers are aware of the existence of codes of conduct, and even fewer understand their implications." The report also noted that, because it's customary to post rules for workers on bulletin boards, they don't always realize that these codes refer to their bosses' behavior.

But after conducting inspections in 30 countries, Verite (a nonprofit monitoring organization based in Amherst, Mass.) feels safe estimating that "80 percent of factories that claim to abide by their U.S. clients' codes of conduct, don't." According to the U.S. State Department's 1998 human-rights report: In Guatemala, "labor courts responsible for enforcing labor laws continued to be generally ineffective." In Honduras, "the Government has acknowledged that it does not yet adhere completely to international labor standards." In Indonesia, "despite laws that provide women with a three-month maternity leave, the Government has acknowledged that pregnant women often are dismissed or are replaced while on leave." In Sri Lanka, "several laws protect the safety and health of industrial workers. However, the Department of Labor's small staff of inspectors is inadequate to enforce compliance with the laws."

Two years ago, the Episcopal Church counted up its Kellwood stock and put a resolution on Kellwood's August 1998 proxy, urging the company to take justice into their own hands by adjusting salaries to a living wage, increasing workers' minimum age to 15 and consulting with local NGOs for monitoring. Kellwood argued that it would be impossible even to agree on a living wage, let alone pay one. According to the St. Louis Post-Dispatch (Aug. 28, 1998), "Upbin said that while it is "right and proper' for the Episcopal church to concern itself with social issues, Kellwood's primary focus is building value for shareholders. In the highly competitive apparel business, Upbin said, it isn't prudent to require contractors to pay higher wages." He also said that no NGOs were qualified to do independent monitoring.

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