 Apr-Jun 2006 |
Corporate social responsibility?Just a public relations exercise that undermines workers’ rightsJeff Ballinger
A new phenomenon has
swept the world of international business over the past decade or so.
Transnational company giants such as Nike, Levi’s, Reebok and others
have developed sophisticated corporate social responsibility programs
designed to develop a desirable corporate public image. They are driven by
a need to respond to increasingly articulate and well-informed criticisms
of the sweatshop conditions under which they produce shoes and garments in
developing countries. To succeed they need to be seen as attractive brands
produced by responsible companies, whose products are desired by fashion
conscious and socially aware consumers. But do these social responsibility
programs effectively deal with the issues social activists are campaigning
about? And what do workers in the sweatshops think about them?
Corporate mirage
There are two very different worlds in which corporate
social responsibility programs operate. One takes place at conferences
about ‘the triple bottom line’ or
‘ethical-supply-chain-management’. The other takes place where
‘the glue meets the shoe’ in factories and the squalid
workers’ dwellings that surround them across Indonesia and elsewhere.
In conferences and academic business schools in
western capitals, companies like Nike are often lauded for reaching the
pinnacle of social responsibility. Some western environmental groups are
effusive in their praise for the ‘green’ initiatives of
corporations. The apparel conglomerate Levi’s aspired to the same
giddy heights in Indonesia. Back in the early 1990s Levi’s offered to
fund a clinic for the workers making jeans under contract. Of course in
some circles this was seen as a worthwhile attempt to ameliorate the awful
working conditions at the Levi’s supplier. Teten Masduki — then
a top legal advocacy coordinator — was offered a leading role in
managing the clinic. He rejected the offer, emphasising the demands of the
protesting workers, who wanted local managers at Levi’s
sub-contractor to sit down and bargain with them in a dignified manner. A
clinic was far from meeting their primary concerns, no matter how impressed
business journalists and some social critics might have been half a world
away in the United States.
The core issues for workers in sweatshops are their
basic conditions and the right to bargain collectively. Local suppliers and
sub-contractors in Indonesia have no intention whatsoever of addressing
workers’ real concerns as long as they are being squeezed by the big
buyers like Nike. This, of course, is at the heart of the out-sourcing
paradigm. Nike and others with an international image to protect long
ago decided that sub-contracting production to local suppliers had serious
benefits. It not only reduces their costs; it distances their brands from
the unseemly exploitation of the workers who make their products.
This business model is ruthless. A Nike board member,
Michael Spence, acknowledged this when he told business students in
Singapore several years ago that businesses needed to be hardheaded about
out-sourcing. This, he said, had become an imperative internationally,
especially in the garment, footwear and toy industries. What he
didn’t tell them was how it led to a dramatic increase in
abusive conditions in factories around the world. Or that it had crippled
many formerly vibrant trade unions.
In the context of this ruthless out-sourcing, social
responsibility programs were seen as a profound assault on the very idea of
human rights and democratic values in the factories themselves. How
could the cheated and abused Indonesian workers have drawn any other
conclusion? Corporate strategies are really aimed at forestalling
factory-level collective bargaining, which, in turn, inhibits the
development of worker self-organisation. Workers — and Indonesian
society as a whole — were denied the powerful voice of organised
labour in their efforts to challenge the military-dominated
kleptocracy of the late Suharto era. Unlike workers in Brazil, South
Korea, Poland and South Africa, who were able to play lead roles in ousting
autocratic regimes, Indonesian workers were for the most part quiescent.
Social activists compromised
Business is not alone in designing projects that steer
workers away from confrontation. Some progressive social movements have
inadvertently contributed to workers’ woes. Dita Sari, a leader of
the most militant trade union grouping in Indonesia, sees even the World
Social Forum (WSF) in this light. According to Dita, ‘The WSF has
succeeded in making the working classes and the poor more aware that
capitalism is the source of war and injustice. But after four forum
meetings the anti-globalisation movement has not yet broken out of its
limits as a moral movement, and has yet to transform itself into a
political movement that offers clear and explicit economic and political
alternatives.’ Dita also made a harsh assessment of Reebok’s
Human Rights Award for social activists, a prominent part of its social
responsibility strategy. When offered the award she rejected the honour
— and its US$50,000 grant — on the grounds that the Reebok
offer was hypocritical when its contractors near Jakarta were still
actively cheating and abusing workers.
Neil Kearney, general secretary of the International
Textile, Garment and Leather Workers’ Federation has gone even
further. He bluntly accuses some social activists from the west of usurping
the rights of sweatshop workers to bargain for themselves. ‘These
people are taking it upon themselves to enter factories, uninvited and
without the consent of workers, to pontificate on and attempt to direct
practical industrial relations issues...Many NGOs (non-government
organisations) have made an amazing contribution to creating a climate for
change, but some are now overstepping the mark, entering workplaces and
donning a representative role without any mandate from workers. This is
disempowering these workers and hindering rather than hastening the
elimination of exploitation.’
Uncritical media
Corporate social responsibility programs have
succeeded in part because of lazy and uncritical media reporting. This is
one of the reasons the shoe and apparel companies have been able to paper
over the ‘sweatshop’ issue. Most of the commercial media in
western countries blithely accept company pronouncements on social
responsibility and ignore any evidence to the contrary. When Dita Sari
rejected Reebok’s award, local press reports barely noted her
principled stance and failed to ask the presenter, Archbishop Desmond Tutu,
what he thought of it. When a Nike report on Indonesian factory conditions
was released in 2001, it revealed widespread sexual harassment. The company
offered no compensation but won unqualified praise for its
‘transparency’. Meanwhile, women workers at an auto factory in
North America shared a US$9 million jury award for sexual harassment and
the company was fined US$34 million. Social responsibility programs are not
only cheaper than rights for workers, they provide better public relations.
Reporters writing about the new global
factory-production system may be easily fooled by skilled public relations
teams offering up dubious ‘monitoring’ and NGO-partnership
schemes, but something more insidious is happening. Many of the ideas on
corporate social responsibility emerge from ‘independent’ think
tanks and universities. In truth, the intellectuals involved are often
financed by the corporate giants themselves. One recent study of Nike in
the respectable Harvard Business Review provided ‘objective’ analysis to conclude
it had become a top-ranked ethical company. The author failed to reveal
that he was paid by Nike and was heavily involved in its now-defunct Global
Alliance for Workers and Communities.
The corporate media, academics, NGO activists and
‘ethical investment’ communities fail to ask how much
contractors are paid for made-to-export shoes. It is, however, the
overriding concern of Indonesian workers. Workers will never attain a
living wage or genuine collective bargaining rights under the current
exploitative model — a model that the garment and shoe industries
brought to Indonesia in the late 1980s, as compliant dictatorships crumbled
in South Korea and Taiwan.
Contract suppliers pressured
Contractors working for the big multinationals operate
under extreme pressure, as a 2003 assessment of Yue Yuen, the world’s
largest contract manufacturer of branded athletic and casual shoes,
demonstrated. The report was by the bond rating company, Standard &
Poor’s, who noted that the company’s ‘leading market
position, low cost operations as a result of economies of scale and low
cost production bases’ were being undermined by the ‘increasing
pressure on pricing from Yue Yuen’s customers [such as Nike] and high
customer concentration’. This is how Nike manages to garner praise
for ending sweatshop abuses — by continuing to squeeze the
contractors that must actually pay the workers.
That the major-brand sport shoe companies are
profitable can hardly be questioned. When Adidas purchased Reebok the
outgoing Reebok CEO received US$ 800 million in compensation. In the years
that all his contractors were found to be cheating on the Indonesian
minimum wage of just 86 US cents per day (1988-91), the same CEO paid
himself annual bonuses of more than US$14 million. The insidious nature of
corporate social responsibility programs coupled with the ruthless
out-sourcing means the future appears bleak. But there is hope. Some
promise for justice may lie in the recent victories won by Asian workers
against US companies. But transnationals like Nike, Adidas and Levi’s
— and their contractors — need to be called to account. They
should be made to pay restitution for all the years they have expropriated
the wages of workers who are at the bottom of the food chain and least able
to defend themselves.
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