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Strangehold of the sub-contractor system

In Bangkok 890 ready-made clothes workers are suddenly without work and wags. They were making brand products for Nike, Levi’s and Adidas and now feel on their bodies how a complicated system with sub-contractors create cut-neck competition, low wages and uncertain working conditions for the local workers of famous brands.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
In Bangkok 890 ready-made clothes workers are suddenly without work and wags. They were making brand products for Nike, Levi’s and Adidas and now feel on their bodies how a complicated system with sub-contractors create cut-neck competition, low wages and uncertain working conditions for the local workers of famous brands.

By  Pia A. Gaarder

When NorWatch recently were in Bangkok, the workers in the ready-made clothing industry had been camping for 21 days outside the Ministry of Labour. Trade unions are generally weak and Thai authorities  shy away industrial troubles, but when workers met a closed factory the cup was full to overflowing.

The Thai company “Bed and Bath Prestige” were producing for international brands like Nike, Reebok, Adidas, Levi’s and Fila. In the beginning of October the factory was closed, and the owners disappeared from one day to the next – without warning  and without paying the labourers the pay due. Machines were leased and the factory building had been hired, and were no problems for the owners.

According to the workers the company management is now moving production to Laos or Burma, were wages are lower and demands to satisfy working environment is even weaker – if not non-existant. Although this procedure formally is illegal in Thailand, it has not prevented a quick move against the national borders.

The two owners  - the married couple Chaiyapat Phothikamjorn and Uayporn Songpornprasert – ownss the Bed and Bath workers 16 millon baths (3.36 million NOK) in wages and compensations.

Who is responsible?
A growing public opinion is asking what responsibility the major brands have for workers who manufacture their products through sub-contractors, and for competition that leads to wild west-like situation among local manufacturers. For the local profit margin is relatively small, the competition is razor-sharp and cynicism is widespread.

- It is too simple to claim that international companies have nothing to do with local labour conditions, Lek Yimprasert  told NorWatch.

Lek is the leader of the Thai Labour Campaign which assists the Bed and Bath workers in their protest. She says major international branding companies, like Nike, should take their ethical guidelines seriously, take responsibility for the workers whether or  not they own the factory that is manufacturing their products.

According to Thai law workers in a factory that is closed down have a right to be paid compensation, she says.

She emphasizes that she does not want the international gigants withdraw orders, which often happens when the swet-shop working condition in the factories become known.

- We wish that they use their influence to improve working conditions, not make them worse by pulling out, Lek says.

International agents
- The globalisation of the textile and ready-made clothings industry have allowed the production to be handled by international agents like the U.S Haddad Apparel. The agents work as intermediaries between the big international companies and the factories, says Lek.

The agents approach hundreds of factories in different countries competing for the orders. The system itself invites price pressure, and the direct responsibility for the price is mover down in the system.

The Thai company Bed and Prestige produced for international brands like Nike, Reebok, Adidas, LEVI’S, Fila, and more than 40 other companies that order children’s and sports wear through Haddad. All production at Bed & Bath were exported to Europe and the United States.

Tough working condidtions
-  Bed and Bath boasted their workers were the best paid textile workers in Thailand with 11.000 Bath (2310 NOK per mont, 2.5 times the minimum wage), but that did not take into consideration the insecurity and working hours,  Lek says.

The workers could earn good money for a short time when there was much to do. However, they had to work up to 22 hours a day until the goods were finished. In addition, they earned well only before the piecework agreements were renegotiated and the price per actually reduced.

The legal absolute minimum pay in the Bangkok area is 4290 baht (900 kroner) per month, with Sundays off. This is the minimum existence pay for one person. At Bed & Bath workers could earn between 6.000 – 11.000 baht (1260-2310 NOK). They had a 10 minute lunch pause. To keep awake they had to drink cups and cups of coffee with the company allegedly sold for 12 baht a cup.

Workers have also been victims of other transgressions. The owners allegedly did not deposit the legal social expences that gives right to sick-leave and a small pension. Rumours said drinking water was was laced with amphetamine to keep the working going the long hours.

On top, all Bed & Bath workers were only employed for one task at a time. In low season half of them were laid off. The though working conditions in effect lead to the fact that most of the staff mostly were young, 20 to 30 years of age. All carried a name tag, with the Nikes Code of Conduct printed on the back side. The Nike’s Code of Conduct are supposed to be standard conditions for any company producing products fore Nike.

Nike's policy
Nike is producing in more that 700 factories in 50 countries. Their “Corporate Responsibility Report” says that an average worker is 22 years of age and single. 80 per cent ofn the workers are women, 83 per cent can be found in Asia.

Most Nike producers are found in China with 74 factories, followed by Thailand with 62 and Korea with 49 factories.

The relation between shoes and attires are 60-40, but the ready-cut clothing is growing, Nike Europe tells NorWatch. Of 62 Thai production sites for Nike, 42 per cent is involved in ready-made clothing, 11 per cent in equipment and 9 per cent manufacture shoes.

Nike's reply to Bed & Bath
At the end of November Nike was forced to reply to the criticism concernng Bed and Bath in Thailand. A press release came from Nike’s headquarters at Beavterton, Ohio. Nike stated it did not have advance knowledge of the closing pf the factory, and that the closure had no relation with change of orders from Nike.

In the press release Nike said they had licence production with the Haddad Apparel Group, and that only 20 per cent of Bed and Bath’s production was for Nike. It goes on the say they will find out had happened, cooperate with authorities investigating the case and see what can be done to help the workers.

NorWatch has received no response from Nike’s headquarters in the United States when asking what the company’s general statements and what Nike will do to help the Bed and Bath workers.

Admits responsibility
Nike Europe tells NorWatch that the company as a general policy enters into agreements with sub-contractors directly, and that licence production is limited as far as possible – because the company may easily loose control.

- We are in any case responsible for working conditions at the factories producing for Nike. The company’s “Code of Conduct” is also for sub-contractors, says a spokesman for Nike Europe, who declines to give his name.

Asked whether Nike establishes stable relations with factories or sub-contractor factories, the spokesman says at the usual market mechanism rules. This is particular so when it concerns labour intensive and little technology-oriented production like the textile and ready-made industry.

In reality this means that  the lowest price decides who gets the contract. No factory is secured continuity in the order books. When the tender for the next round of a similar vestment goes around, the task may go to another company, which again drives the prices down and create razor-sharp competition between factories, regions and countries.

Who controls?
Nevertheless, Nike insists that they control the labour conditions in factories that produce their brands. Still, it seems like the control of a mulitude of factories that changes again and again, is a weak point in the control.

- In order to control working conditions, the brands companies pay own inpsector companies to control the working places.This is the weakest point, says Lek.

- In practice these companies never see what we see. They find no important problems with Bed &  Bath. Nothing odd about that. The inspectors walks goes about and talk with workers who has been instructed what to say. Otherwise management threatens of lay them off, Lek says.

What is known as “Corporate Social Responsibility” is nothing more than a part lof the brands companies PR strategy, she says.

Norwatch Newsletter 9/10-02