Retail Traffic

HOT TOPIC: From sweatshops to shopping malls

In 1998, Manchester, N.H., authorities arrested eight protestors for picketing a Foot Locker store at the then-privately owned Mall of New Hampshire. A subsequent free speech lawsuit and enormous media coverage drew nationwide attention to the group's cause — ending U.S. companies' involvement in “sweatshop” labor practices overseas.

“It sends a clear message to retail store owners that their consumers are concerned about this,” says Arnie Alpert, one of the arrested picketers. While the “Foot Locker Eight” lost a lawsuit accusing the mall of violations of free speech and civil rights, the group of activists felt they succeeded in educating consumers about abusive labor practices at factories suppling products to Nike and Foot Locker. Alpert says shopping centers are the ideal place to get the message across to consumers and retailers.

Such public pressure coupled with a sense of social responsibility has forced big brands to take a hard look at their business practices in developing countries, Alpert says. But as long as the return on investment of using these subcontractors remains high, most chains will be reluctant to discontinue selling items that are questionably produced.

Retail chains and brand-name manufacturers such as Foot Locker and Nike don't own the offshore factories or cut-and-sew shops in New York and Los Angeles. But the purchasing power of a Nike, Reebok or Gap is apparently so great they exert control over wages and working conditions in the subcontractors' factories.

Nike has been under a harsh spotlight in recent years for alleged labor abuses at a Southeast Asian shoe factory. The Beaverton, Ore.-based footwear giant has since taken several steps toward improving working conditions in its Southeast Asian factories, says Brad Figel, director of governmental relations for Nike.

The steps include raising wages for Indonesian workers by 40%, switching to water-based adhesives and working to end the repression of unions. Nike has also contributed to a community loan program, health clinics, childcare and continuing education for the workers in Indonesia.

“We're doing this because it's part of our sense of corporate responsibility; we are starting to get more support from press and consumers,” says Figel who is on the board of the Washington-D.C. based Fair Labor Association. The FLA is an initiative bringing together business and non-governmental agencies to improve factory conditions.

Nine companies have joined the Fair Labor Association since it began in the mid-1990s. They are adidas, Eddie Bauer, Levi's, Liz Claiborne, Nike, Patagonia, Phillips-Van Heusen, Reebok and Gear for Sports.

These powerful brands are working with the FLA to create an independent monitoring system that will hold companies publicly accountable for fair labor standards and help improve conditions when problems arise, says Maureen Murtha, university liaison for the Fair Labor Association.

But the road ahead is still long. About 250 million children are put to work each day in developing countries. Starvation wages, child labor, forced abortions, excessive hours and near-slave conditions still sometimes prevail. Back in the U.S., nearly two-thirds of cutting and sewing shops in Los Angeles fail to comply with the minimum wage laws, the U.S. Labor Department reports.

Competitive U.S. manufacturers, enticed by cheap labor, free trade agreements and lower transportation costs, are moving more and more production overseas, says Peter de Simone, co-author of “The Sweatshop Quandary” published by the Investor Responsibility Research Center in Washington, D. C.

“Some manufacturers look the other way,” de Simone says. “But these companies begin running into problems apart from labor conditions. Their supply chains get completely out of control, and they have no handle on who's making their goods. And some of them have eight to 12 (fashion) seasons. There are some basic business implications if you don't know how a garment is being sourced.”

That's what happened to Liz Claiborne until the company established labor standards for its suppliers, de Simone says. The 220-unit Liz Claiborne chain received high marks for honesty from fair labor groups for making public a highly critical report on factory conditions in Guatemala.

“In the coming decade, the sweatshop debate will focus on setting and enforcing a living wage for workers overseas,” de Simone says. “How involved should companies be in raising global living standards? And what determines a living wage in a country where the government sets the minimum wage far below the poverty level?”

More and more these days, shareholder activism is becoming popular with consumers as a method to draw awareness to sweatshop practices. Socially Responsible Investing or SRIs offer investors mutual funds that are screened for companies fitting certain ideals. According to these advisors, it may be a wise business decision for those in the retail industry to see how they measure up.

David Wieder, CEO and managing principal of Domini Social Investments, the bellwether of SRIs, explains Domini fund managers work with companies to change their stance on issues ranging from the environment to human rights to social justice.

Domini recently announced that Wal-Mart was dropped from its socially responsible index fund, the Domini 400. Officials cite a report from the National Labor Committee that Wal-Mart goods were made by nearly enslaved workers under armed guard in Honduras and China. Wal-Mart's “Kathie Lee” goods were made by 13-year-olds in Honduras, forced to work 13 hours a day, the report states.

Sigward Moser, president of Domini Social Investments, says the firm tried to discuss the issues with Wal-Mart for years before the retailer was removed from the index, but the company was “very unresponsive.”

“Domini is not one of the biggest shareholders and Wal-Mart's not going to go out of business,” says Catherine Hickey, an analyst for Chicago-based financial consulting firm Morningstar which specializes in socially responsible funds. “But I think people are paying attention to these issues more.”

Overall, experts say, the focus will turn away from actual incidents to the broader effects of economic globalization and free trade agreements. Disagreement will be widespread as to what sort of monitoring is adequate, in-house or third party, the level of detail that should be included in reports, and who should be reviewing them. Factory monitoring and compliance efforts are a work in progress. With the consumer spotlight on the issue and retailers becoming more responsible, there seems to be a progressive, albeit slow, trend toward continuous improvement.

Ellen Braunstein is a Toronto-based writer.

A “Pilar” of the community

Ruth Josephs felt uneasy every time she sold a raw silk blouse at her South Texas boutique. She bought two dozen at a market in Dallas. But something seemed wrong.

“How can they make a shirt like this and sell it for $10?” she asked the sales rep. “They have to pay duty, transportation, handling fees, to bring them to market. How much can the person making the shirt be getting?”

The clerk had no answer. So Josephs never bought the shirts again. She now fills her speciality shop, Pilar, with imported crafts made by women working for themselves in village co-operatives. She buys goods from Indian groups that literally take women off the streets, training them to be embroiderers instead of prostitutes. On trips throughout the world, Josephs visits the villages she buys from and watches for signs of sweatshop practices.

“I feel that retailers have the power to help improve conditions for the working people. People shouldn't be afraid to ask questions when they are buying,” says Josephs.
— Ellen Braunstein

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