In 2015, we identified five priority challenges to ensure safe and fair working conditions in our supply chain. These issues are complex, requiring a systems approach to understand the causes and potential solutions. They are also issues which require collaboration and dialogue to solve:
Working more than 60 hours per week is the most common challenge for the industry. Our Code of Conduct requires that all of our suppliers comply with national laws, collective agreements, and important elements of the ETI base code around maximum working hours, overtime pay, and rest days.
There are situations where working more than 60 hours is accepted under exceptional circumstances and only when allowed by national applicable law, collective agreements, and safeguards are taken to protect workers’ health and safety.
Nonetheless, we recognize that buying and sourcing practices affect how our suppliers plan for production, and can have significant impacts on working hours. We often find that many workers move within their home country to find work in cities, where they often want to work more hours to maximize their pay before returning home. To add complication, there are cases where factory management may keep double books to hide excessive working hours.
Dealing with this reality is not easy. Over the past two years, we have emphasized transparency with our suppliers and their factory management. Developing trust around transparency through strong supplier relationships is key to finding solutions together. Bottom line, our suppliers must use reliable time recording systems, where all regular hours, overtime hours, and breaks are accurately tracked. Our SSC auditors help our suppliers to understand these requirements and we actively work with factory management to ensure transparency and accuracy of these records.
In 2016, we will choose three strategic suppliers in China to pilot a program on excessive working hours, focusing on better planning. We will collaborate with other brands that also source from these suppliers to improve our business commitments which will result in better planning to eliminate excessive working hours. As an outcome of this work these suppliers will create goals and action plans to create sustainable performance on working hours overtime.
Because workers want to maximize their pay, reducing work hours is only realistic if the wages stay at the same level or higher. This means that the factory will need to work on production efficiency and productivity to compensate for the reduced working hours. Together with our suppliers and their factories, we work together to create an environment for stable working hours. With our learnings, we will be expanding the project to additional strategic suppliers in other production regions. Read how we’re working with ACT to increase the garment industry wage floor.
We expect our suppliers to use overtime responsibly by not regularly requesting overtime, and by ensuring that it is voluntary. Our Code of Conduct requires that workers are compensated for overtime in a timely manner when working beyond 48 hours. At all times, they must allow workers to take breaks, to take a day off in every seven-day period, and to take statutory holidays. Suppliers also must take appropriate measures to assess, mitigate, and monitor workplace hazards to minimize injury risks that are specifically related to long hours.
However, we recognize that we can inadvertently support excessive overtime through our purchasing practices and through last minute changes in design or production. This requires us to be exceptionally diligent in the effects of our purchasing practices and to work with our suppliers and their factories to emphasize that if overtime is expected that they meet our requirements for payment.
For many years, we have required our suppliers and their factories to compensate workers by paying wages that meet or exceed legal minimum and/or industry benchmark standards, whichever is higher. Even so, it’s still not uncommon to find that the overtime premium is not paid. In some cases, workers are being compensated by productivity—by the number of pieces made, instead of hourly at a premium rate.
Whenever a piece-rate wage is used, suppliers must demonstrate that these payments are at least equivalent to the minimum wage. This is supported by a written wage and compensation policy that is communicated to workers through employee handbooks, notice boards, letters, regular meetings, or other means. They must also provide tailored training to all workers and subcontractors.
Overtime compensation is part of our pilot project on excessive working hours. We’re also working on a new approach to assess overtime payment at suppliers, supporting them to set targets and make continuous improvement on pay practices.
Garment workers’ wages must be sufficient to meet basic needs, support their family, and cover living costs. Making this a reality in apparel production countries can only happen if brands and retailers work together. This is why the multi-stakeholder initiative Action, Collaboration, Transformation (ACT), was formed. As a founding member, we aim to actively participate in ACT by working with other Brands and international labor unions to unite stakeholders in improving wages through industry collective bargaining in key production countries, world-class manufacturing standards, and responsible purchasing to increase the wage floor.
ACT is a coalition of 17 Brands coming together to establish Enabling Principles for living wage. We have signed a Memorandum of Understanding with IndustriALL Global Union, and are actively involved in working groups and factory pilots. Initially funded by the C&A Foundation, we remain active in the core strategy group of the initiative. Learn more about ACT here.
Three of our suppliers' factories in Cambodia are currently piloting the principles to develop a replicable and scalable strategy to be expanded to other sourcing regions, with a common goal of empowering workers to bargain collectively. In 2016, this program will expand to Myanmar.
Aleix Gonzalez Busquets, Head of Stakeholder Engagement, C&A Global
ACT is the perfect example of how, only through collaboration and among stakeholders, we can address key issues such as freedom of association, collective bargaining, and ultimately living wages throughout the supply chain.
Our SSC team assesses that new production units meet the requirements set out in our Code of Conduct. We require that all new suppliers and their factories are on-boarded with our audit program before an order is placed.
Unfortunately, a supplier or their factory management may withhold details of the production units they use—a serious violation of our Code of Conduct. In all cases, SSC and quality assess the situation and the undisclosed production unit to ensure that zero tolerance items are not found. A supplier can be suspended for 12 months or terminated, depending on investigation results.
In 2016, we are rolling out a new three-strike policy to mitigate the risk of undisclosed production units. If undisclosed production is confirmed and their production meets our Code of Conduct requirements and quality standards, the supplier will receive a warning on the first instance. The supplier will be suspended for 12 months upon the third warning.
In all cases, if a zero tolerance item is found, the supplier will be suspended immediately for 12 months.
In spite of our commitment to eradicate undisclosed subcontracting in our supply chain we found 24 cases in 2015 which were remediated by sanctions against the supplier or factory. We did not detect any cases of unauthorized home working during 2015.
It is not often that we enter new production countries, but when we do it is essential to complete a thorough risk analysis and human rights due diligence. This process helps to pinpoint the benefits and risks of production in the country. If potential risks are identified, we investigate whether they can be solved with our interventions, and whether we can positively effect the situation.
In 2015, we started working with suppliers in Myanmar. We began our process by ensuring that the suppliers that we use were trusted and that we had a long term relationship with them. We assessed their factories against our new Code of Conduct prior to placing orders.
To further support our aim to grow our supply base in Myanmar, we also conducted human rights due diligence with our independent partner, Deloitte. The findings from this assessment and the learning of other brands that had entered Myanmar before C&A were assessed in conjunction with the findings from a recent report by Oxfam, Made in Myanmar. We also engaged local stakeholders like the Myanmar Garment Manufacturers Association (MGMA), local labor unions, the ILO, and opened our supplier's factories to SOMO for additional learning.
This collective information and the relationships that we have built in the process has influenced how we will expand production in Myanmar, safely and with fairness. We will use our learnings to further develop our due diligence process when entering new production countries.
First and foremost, all workers have the right to a safe and healthy work environment. In our Code of Conduct we adapted practices and requirements on building construction, fire protection, and emergency preparedness learned from our work with the Bangladesh Accord on Fire and Building Safety. We have applied these practices and requirements to all of our production countries - not only in Bangladesh.
We inspect all of our factories and require them to have all legal documentation in place for buildings in all areas, including dormitories, canteens, and warehouses. Because we are one of the first Brands to apply standards learned from our experience in Bangladesh, we are closely working with our suppliers to understand the implications of the new requirements. We are also supporting them on the ground to facilitate that legal documentation is equally substituted through independent building safety inspections in Bangladesh and our other sourcing countries. In addition, we have increased our capacity building to ensure that our suppliers' factories have the necessary skills and tools to implement fire and building safety programs and management systems.
C&A suppliers are also required to maintain adequate insurance that covers workers for any injuries, accidents, or death. This applies to all work done on site and should also, when stipulated by law, include contractors, temporary, and part-time workers.
Since 2015, we have implemented fire safety practices from the requirements in the Bangladesh Accord. We’re applying what we learned in Bangladesh to all of our suppliers in all sourcing regions. As this is a more detailed requirement - and one that requires greater accountability through the use of fire-resistant doors that have been certified - many suppliers are still purchasing and installing these doors for emergency exits, or having their existing fire-resistant doors tested. We’re actively building capacity and supporting supplier production units with the necessary improvements in Bangladesh and our other sourcing countries.
It is three years since the Rana Plaza collapse in Bangladesh, in which more than 1,100 garment workers lost their lives.
C&A was one of the first brands to sign the Accord and have played an active role since 2012 in the steering committee. The Accord is an independent, legally binding agreement between brands and trade unions designed to work towards a safe and healthy Bangladeshi Ready-Made Garment Industry. Their purpose is to enable a working environment in which no worker needs to fear fires, building collapses, or other accidents that could be prevented with reasonable health and safety measures. The performance in remediating building and fire safety corrective action and the decisions of the steering committee can be found on the Accord website.
We are accelerating the pace and level of remediation at our suppliers’ factories. As of April 2016, the Bangladesh Accord had inspected 1,660 factories and 1,453 corrective action plans had been published. Since 2013, all of C&A's suppliers cut-and-sew factories (140) have been inspected and corrective action plans have been developed for each one. We’ve taken our role seriously by employing a strong team on the ground in Bangladesh to support the closure of corrective action plans, and by providing technical expertise on electrical, building, and fire safety.
As of April 2016, our internal records demonstrate 83% of the 16,163 identified issues in the initial audit of the 140 factories that we operate with had been corrected. We recognize that the official data from the Accord may vary because they must verify the corrective actions before their numbers gradually match ours. We are currently among the leading brands for investigating and closing our corrections.
We remain deeply saddened by the loss of life and injuries caused by the tragic fire at Tazreen Fashion in Bangladesh, a factory that supplied C&A Brazil in November 2012. In the aftermath, C&A Foundation provided immediate financial support to the families of all 112 people killed and established a fund to provide ongoing support to 49 adult dependants. Working with Caritas Bangladesh, C&A Foundation created a rehabilitation programme to help survivors find a new path in life.
Now, C&A, C&A Foundation, the Clean Clothes Campaign, and IndustriALL Global Union, have pledged more support. This new compensation process covers loss of income, and provides independent medical assessments and ongoing treatment. In late 2015, the group launched the Tazreen Claims Administration Trust to help victims and their families access payments fairly and transparently. A steering committee made up of Bangladeshi groups working directly with affected families, will advise the Trust on eligible claims. C&A Foundation has contributed US$2.2 million, and is also covering ongoing administrative costs.
Supporting the right for workers to organize and to collectively bargain is fundamental to improving labour conditions in apparel production countries. Freedom of Association remains an important focus of our strategy to increase worker/management dialogue and to advance the performance of our Suppliers' factories globally. In our Code of Conduct we require our suppliers to adopt an open and collaborative attitude towards worker representation, allow workers to form or join trade unions of their own choosing, and to bargain collectively.
To support our supplier requirements, we are launching a pilot to explore ways to create social dialogue between workers and management in 2016.
We recognize that there are countries like China where collective bargaining is restricted by law. In these cases we expect our suppliers to help employees establish alternative forms of worker representation and negotiation. We also expect our suppliers to establish, implement, and communicate a grievance mechanism that is accessible, predictable, equitable, transparent, rights-compatible, confidential, and based on engagement and dialogue to resolve internal disputes and employee complaints. Freedom of association is tested as part of our auditing process and violations are a zero tolerance issue.
When freedom of association issues are discovered through auditing, union allegations, or via our Fairness Channel, we take decisive action to work together with external stakeholders to resolve the issue and ensure reinstatement of any dismissed workers.
During 2015, we observed four freedom of association cases, one in Turkey and three in Cambodia. In each case, our intervention enabled the issues to be resolved and workers compensated.