Friday, June 9, 2017

Social Compliance- A Needed Reevaluation

Don’t get me wrong. I agree that the customer of a factory, foreign or domestic, has the right to evaluate their suppliers.  What I believe needs reevaluation is the attitude and focus of these efforts with the original goal held dear- protect the workers.

The practice of social compliance today is a very sophisticated form of ass covering-especially for major retailers who don’t want to take any chances of being associated with a factory which engages in “questionable” labor practices or who suffers some catastrophic event, such as a fire. There is little thought given to the workers themselves and what is good for them (such as getting orders).

Same thing, you say. Making the factory adhere to certain labour and safety standards does protect the workers. The problem is, if the standards are too over the top by being too many or too complicated or unattainable, a factory may fail an audit even if they have basic and common sense standards in place. Let’s take fire, for example. After a catastrophic fire at a factory in Bangladesh (which never should have been used in the first place—another problem to be discussed later), Walmart went over the top with fire protection. One factory I was working with which was two floors high with a small staircase to the street level was forced to install smoke alarms on a 30 foot ceiling (huh? By the time the smoke gets up there, everybody already knows what is happening), and a fire alarm bell in each room—like some hero is going to stand there and ring the bell instead of yelling fire and getting the hell out himself. Fire marshalls , fire drills, more and more. This all could be simply solved by making the factory supervisor in that workshop responsible for safety in case of a fire. Fire extinguishers, exit signs- these are the basics. And, most of all, basic, common sense fire safety like not putting oily rags near a heater. I assume the Bangladesh factory passed a social compliance audit before it was allowed to produce orders, so something else was missing.

Compliance standards get more complicated every year. Which makes audits more difficult to pass and punishes the workers you are trying to protect. Very few factories I know can pass an audit cleanly because there are too many issues and many are not relevant to real life (my favorite is the Environmental Impact Report-huh? This is an example of the arrogance and lack of reality-based standards). They need to be simplified to the few things that really count, and which can be carried through to daily life in the factory-current ridiculously overcomplicated and unrealistic standards result in the factory dressing up for the audit day and not taking any of it seriously. Next day, back to business as usual. But there is much to be taken to heart. The goal of compliance audits should be to get the factory to understand and embrace a few key and simple cost-effective common-sense principles in each area- so they understand how it benefits them and make it part of their daily practice. Today’s reality is far from that goal.

Another main problem with compliance is the arrogance with which it is approached. Those who create and approve the audit criteria insist that every factory should be able to meet these standards every day-that without consideration of the realities of your average low-cost third world factory today. Those of us who have lived with these factories for years can clearly see the futility of many of these standards and the overall process. I strongly suspect that those writing and approving the standards don’t know or don’t care.

And, when the factory makes the news, such as the shoe factory in Dongguan who made the news recently due to suspected labour abuse and the arrests of some activists who tried to surreptiously document these abuses—made more juicy and newsworthy because it is Ivanka Trump’s shoe factory (no it isn’t- her shoe line is licensed and she not only never heard of the factory but surely has no role in which factories are chosen by the licensee) it becomes “China” not “this factory in China.” So the whole country is implicitly accused of labour abuses and uninformed readers will believe that is the case. With all due respect, when the US largest employer (Walmart) is also accused of labour abuses, should the Chinese people carry this as the impression of American management and not shop in Walmart China, or should the supplier refuse to sell to them?

In all of this, one key point is lost. The average worker, whether they are in China or another country, the same ones who the compliance regimen is supposedly geared at protecting, those who need to make money every day to feed their families, are the ones to suffer when compliance standards cannot be met and their factory cannot get orders. They also suffer because the good lessons of social compliance are lost in the overcomplicated mess of the practice today.

What should be done?
1.     As I said before, simplify. Reduce the audit criteria to the few basic, common-sense principles that will ensure safety and fairness to workers, and which factories can learn and practice.
2.     As a customer, don’t choose factories whose situation and management attitude guarantees they never will be a safe and happy place to work-even if their price is seductively low. You know who they are.
3.     This is far fetched and may never happen, but I think that countries themselves should set basic audit principles and provide approval grades and ratings (like the health department) which can be viewed publicly, so that potential customers can see them before they consider placing orders. Most important, if the nation is taking responsibility for social compliance (and not letting it fall prey to corruption-that is the tough part), the retailer or manufacturer’s ass is covered.


The best part of the above scheme is that the millions of factories making goods for domestic consumption should also be subject to these rules. That, dear readers, will be a victory for social compliance that we will never see under the current regimen.

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