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THIRD WORLD FACTORIES BRING JOBS, HEADACHES

By Curt Hazlett

When British news reports accused Sir Philip Green’s Arcadia Group of selling clothing made in Mauritian sweatshops, the billionaire retail mogul was pilloried as a heartless profiteer. London’s Sunday Times described Green aboard his 165-foot yacht, “drinking Cristal champagne and shouting into his mobile phone.”

Arcadia’s suppliers were reported to have forced their migrant employees to work 70-hour weeks and live in crowded (though free of charge) dormitories. Green’s defense, that the workers were paid more than the minimum wage set by the government of Mauritius, did nothing to quell the controversy.

Arcadia is the latest in a long line of retailers that have discovered the destructive power of sweatshop allegations. Two of the world’s most famous brands, Nike and Gap, were attacked for years over their labor practices and have adopted stringent and costly “corporate responsibility” practices as a result. Other brands that activists have accused of exploitation include Abercrombie & Fitch, AnnTaylor, Eddie Bauer and J. Crew.

Nor will Arcadia be the last to stand charged. The anti-sweatshop movement, born on college campuses a decade ago, has gathered momentum, as garment unions and so-called socially responsible investors have come aboard, and its power shows no signs of abating.

“I worked in the fashion industry for 32 years, and I can tell you that in the last half of my career, when I worked on the supply side, any wholesaler who did business with any large company was under very tight scrutiny,” said Rose Regni, an associate professor of fashion design and merchandising at Virginia Commonwealth University. Increasingly, suppliers “have to sign off that they aren’t using child labor and that they are treating people fairly,” Regni said. People will not do business with you otherwise.”

No longer can retailers deny knowledge of a supplier’s problems, says Marsha Dickson, a University of Delaware professor and chairwoman of the fashion and apparel studies department. “Everyone knows there are a lot of labor-related issues out there, and we’re past the point where a retailer can say, ‘It’s not my responsibility; I don’t own the company,’ ” Dickson said. “Consumers know that retailers do have a big role.” (The University of Delaware offers an online certificate course in socially responsible and sustainable apparel manufacturing.)

There is widespread agreement that workers in foreign apparel factories have often been treated poorly on a human-rights basis. In a 2005 report on the 700 overseas factories with which it does business, Nike acknowledged a long list of labor abuses by its suppliers, among them restricting access to drinking water and toilets and forcing employees to work overtime. The Beaverton, Ore.-based company has since vowed to improve factory conditions, though activists continue to boycott its products.

But there is less agreement on whether these low-wage overseas factories are bad economically for the workers. Interestingly, one of the most persistent defenders of such factories is New York Times columnist Nicholas Kristof, one of the leading liberal voices in the U.S.

Kristof has long held that low-cost outsourcing has the potential to bring better conditions to the world’s most economically blighted areas. “Well-meaning American university students regularly campaign against sweatshops,” he wrote last year. “But instead, anyone who cares about fighting poverty should campaign in favor of sweatshops, demanding that companies set up factories in Africa. If Africa could establish a clothing export industry, that would fight poverty far more effectively than any foreign aid program.”

Jagdish Bhagwati, a professor of economics at Columbia University, New York City, makes much the same argument. Multinational companies should treat their workers humanely and decently, Bhagwati says, but they should not be expected to pay wages above local levels. He points to research showing that multinationals on average already pay local workers a premium of about 10 percent.

In fact, a 2005 study by economists Benjamin Powell and David Skarbek concluded that apparel industry wages are high enough to pull most local workers above poverty levels in their countries. “While more than half of the population in most of the countries we studied lived on less than $2 per day, in 90 percent of the countries, working a 10-hour day in the apparel industry would lift a worker above — often far above — that standard,” they wrote in a Christian Science Monitor column. In Honduras “the average apparel worker earns $13.10 per day,” they wrote, “yet 44 percent of the country’s population lives on less than $2 per day.”

Even the issue of child labor isn’t as simple as activists would have it. To Western ears, “child labor” evokes 19th century Dickensian images of waiflike children working 12-hour days and suffering appalling abuse in textile mills. But today jobs for children can offer poor families a lifeline. Referring to child labor critics at a retail forum in September, Peter Lau, chairman of the international fashion firm Giordano, assailed what he said are simplistic arguments posited by Westerners who are totally unfamiliar with the realities of poverty and survival in the Third World.

But such arguments do little to counter the image of apparel retailers as robber barons. To protect their brands, Nike, Gap and others have moved aggressively to hold their suppliers to international codes of compliance. “The best strategy is to be proactive and be ready to manage the issue, and that means having a code of conduct that is based on internationally recognized labor standards,” said Dickson.

Faced with a drumbeat of criticism over its labor practices, San Francisco-based Gap Inc. launched a “social responsibility” review of its roughly 2,000 supplier factories in 2004. The retailer now has 92 full-time employees dealing with compliance; in 2006 Gap terminated contracts with 23 factories for violating its code of conduct.

In August Gap’s annual report on the topic concluded that conditions have improved at most of its supplier factories, though it also said problems persist in India, North Africa and the Middle East. Maquila Solidarity Network, a Toronto-based labor organization that focuses on Latin America, a leading sweatshop critic, says the improvements were welcome, though it nevertheless chided Gap, whose sales have slumped for three consecutive years, for not unrolling plans to pay better wages.

It is not easy to implement a code of conduct, says Dickson. “It means having people in your headquarters who are responsible for that, and it means training people across the company who might potentially be involved, and you also have to work with suppliers to make sure its happening,” she said.

That’s where many apparel firms seem to be falling short, says Dickson. “You read a lot about what Nike and Gap have done, but I just did a survey of 120 large retailers and manufacturers, and they pretty much don’t want to respond, which makes me wonder if they are doing anything,” she said. “Unfortunately, a lot of companies wait until it’s too late to start a program to manage their social responsibility.”

The anti-sweatshop campaigns have brought about change, much of it for the better. But the question remains whether they have always played fair. “The campaigns seek to get the issue out there in the biggest, splashiest ways possible,” said Dickson. “That’s their reason for being.”

Virginia Commonwealth’s Regni says some of the critics fail to take into account the world’s economic and cultural differences. “We Americans have this habit of thinking that the way we operate is the way everyone in the world is supposed to operate, and that’s not always the case,” Regni said. “Manufacturing left the United States because we were not willing to pay people what was required to manufacture garments. So you’re going to places around the world where people aren’t paid a lot of money, but that’s the only way we can afford to make apparel. You have to weigh whether it is better for 14-year-olds to starve or to find work that can feed them. I don’t pretend to have the answers.”