harpers: the human cost of a $2 sweatshirt

In this previous post, I posted two quotes found in Ken Silverstein's brilliant article in last month's Harper's: "Shopping for Sweat: the human cost of the two-dollar t-shirt". That's not hyperbole, by the way. T-shirts that retail at $40 are produced for $2 or less, and that includes door-to-door shipping from the other side of the globe.

The story is only available online by subscription, but if you want to read it, email me for the text. It's a must-read for anyone interested in labour issues. And anyone interested in poverty, and building a just world. And anyone who wears clothes.

Writing from Cambodia, Silverstein posed as a clothing company rep to gain access to garment factories not usually granted to media. Perhaps the most disturbing revelation is how, in response to pressure from the largely student-driven anti-sweatshop movement, oversight, inspection and international standards have given rise to an oversight industry, but workers' wages remain well below poverty level. Another candidate for most disturbing revelation: the persistent wealthy Western response, typified by Nicholas Kristof, that these deplorable conditions are good enough - for those people.

Silverstein did an interview about the story on NPR; go here and follow links.

But first, read these excerpts from Shopping for Sweat: the human cost of the two-dollar t-shirt, by Ken Silverstein.

In 1999, Cambodia signed a bilateral trade agreement that allowed it to export a quota of textile products to the United States under highly favorable terms. In exchange, Cambodia agreed to improve labor conditions and submit to factory inspections by the International Labor Organization (ILO); if better conditions were documented, the country’s quota would be raised. American unions lobbied heavily for the deal. For the first time, the United States would predicate trade on labor rights, not merely as a talking point but as part of an enforceable agreement. It set the stage for Cambodia to become a major garment exporter and allowed it to build a reputation as a “sweat-free” country.

Even after 2005, when global textile quotas were phased out and the U.S.–Cambodian trade agreement lapsed as a result, the garment industry continued to grow. It is currently the country’s largest sector, employing 350,000 workers, most of them young women. Apparel accounts for three quarters of export earnings, with about 60 percent of that output going to the United States. Many of the biggest apparel brands and buyers source from Cambodia, among them Walmart, Nike, Adidas, Target, Gap, Sears, Eddie Bauer, and Puma. Although there is no longer an enforcement mechanism in place, the ILO continues to monitor factories, and Cambodia has maintained its status as a model apparel producer.... And yet despite Cambodia’s friendly reputation, its workers have not seriously benefited from the trade deal, in terms of either wages or labor standards.

. . . .

...pay for apparel workers in Cambodia has stagnated, according to a 2008 survey, at 33 cents an hour, lower than anywhere but Bangladesh. Directly above Cambodia were Pakistan (37 cents an hour), Vietnam (38 cents), and Sri Lanka (43 cents). China, with wages between 55 and 80 cents per hour in inland areas, was the ninth cheapest. Labor unions are abundant, but most are funded and controlled by employers or by the government, and independent activists have been fired, suspended, sued, and otherwise targeted for repression. In 2004, even before the trade deal with the United States expired, a well-known apparel union leader and founder of the main opposition party was shot and killed in central Phnom Penh. Two other independent unionists were murdered after that, in 2004 and 2007. . . . .

The monthly minimum wage at apparel plants (which, like many Cambodian businesses, typically pay workers in U.S. dollars) was $45 in 2000, and nine years later it was $56; during that same period, inflation has cut the buying power of a dollar by 37 percent.

. . . .

In October 2008, a Phnom Penh newspaper reported that foraging for food was “an increasingly popular weekend pursuit for garment workers feeling the pinch due to the spiraling cost of goods.” To survive, workers scavenged the fields near their factories for wild vegetables, snails, and crabs.

. . . .

In 1999, Reebok, Nike, and three other brands founded the Fair Labor Association (FLA), which describes itself as “a nonprofit organization dedicated to ending sweatshop conditions in factories worldwide” and claims to have “helped improve the lives of thousands of workers around the globe.” FLA “affiliates” are required to establish rigorous codes of conduct, to submit their plants to inspection by “third-party monitors,” and to correct any abuses or shortcomings uncovered. Since then, an entire monitoring industry has emerged: a profusion of auditing firms, consulting companies, NGOs, and multilateral organizations that apparel makers pay handsomely to develop monitoring tools, offer expert advice, and write up countless glossy reports. For workers at apparel plants, though, the benefits have proved elusive. A recent academic study — whose lead author, Richard M. Locke, is the deputy dean of MIT’s business school — reviewed Nike’s own data and found that conditions had “stagnated or deteriorated” at 78 percent of the company’s supplier factories between 1998 and 2005.

Which is not to say that monitoring is inherently useless. When factory inspections are genuinely independent, unannounced, and thorough, they can uncover serious abuses. But one gets what one pays for, as the old saying goes; and since the apparel companies’ dues pay for the monitoring firms that inspect their plants, they tend to get the lax policing that they want.

Very quickly it became clear that the FLA’s main role was to offer image enhancement for its member firms, and so several labor unions and civil-society groups dropped out. Although a number of universities and NGOs do still sit on the board, the association’s main goal is clearly P.R. rather than social justice.

. . . .

I interviewed several dozen apparel workers — none were comfortable having their names published — from three factories, in their neighborhoods or at their homes. All were young women who had come to Phnom Penh from the provinces in order to support their families, and all worked at plants producing for major Western brands, including Levi’s, Adidas, and Puma. None had ever received a pay increase, notwithstanding hikes in the national minimum wage. They all worked overtime, if they could get it, often an extra twenty hours a week, because otherwise they didn’t make enough money to live on. There had been some small improvements in working conditions. Factories tended to be better cooled or ventilated. It was no longer common for pregnancy to lead to firing. At one plant, bathroom passes had recently been abolished. But there were still problems, especially in the aftermath of the global crisis. Besides the widespread layoffs, employees were being told they needed to work faster to keep output up.

Among those I spoke with were ten workers from Chu Hsing, a Taiwanese plant that makes Levi’s jeans. They all lived in a neighboring shanty, which clings to the banks of the Mekong River. We sat in a courtyard, surrounded by a jumble of shacks with corrugated tin roofs and walls of either palm fronds and wood or rough concrete. Large clay pots of water sat outside each home, and charcoal burned in a large metal grill that served as a communal kitchen.

One woman, twenty-three, showed me the tiny shack she shared with two other employees. The mats they slept on were rolled up in the corner of the white-tiled room, which was otherwise furnished with an electric griddle, a TV on a wood desk, and a metal rack on which they hung their clothing. The woman, who worked in the plant’s measurement section, had never been to the heart of Phnom Penh in the four years since she’d moved to the city, even though it was just thirty minutes away by bus. “My rent is $20 a month, I pay $3 a month for utilities, and $1 a day for food,” she said. “If I spent a day in the city all my money would be gone.” She’d seen labor monitors come to Chu Hsing—she wasn’t sure if they were from the ILO or a private company hired by the plant—but to her knowledge they’d never spoken with workers in their homes. Management had prepped employees on talking to monitors. “My boss told me if I wanted a higher salary I should convince the buyers that it was a good factory and they should buy more products,” she said.

At a second shantytown in the Dangkor neighborhood, I spoke with a group of women who worked for Grand Twins International, another Taiwanese-owned firm, which produces clothing for H&M. One worker said that management had instituted a production-quota system a year earlier. “If you don’t meet the quota you get warned, and if you get several warnings you can be fired,” she said. Two employees she knew had been dismissed for failing to meet production goals. She’d come to Phnom Penh nine years earlier; returning to her province was not an option, she said, as “only rich people can afford to tell their daughters to stay at home.” But her living conditions were worse, and she was sending less money home, than when she first moved to the city.

On the way back to town, I stopped on Norodom Boulevard at the Adidas Summer Sales store, where signs in the windows announced steep discounts. It looked like a store in an American strip mall and had prices to match. A pair of sneakers cost $40; a girl’s T-shirt was $32, and a pair of shorts was going for $30. The combined cost came to about two months’ pay on an apparel worker’s salary.

. . . .

...Like Kim at Kie & Kie, Chang needed additional information, but he said that GW could offer a rate of about $2 per piece, which would include shipping. Not bad for a T-shirt that would probably retail at trendy stores for around $30 or $40.

Before I left, Chang took me to a separate room and proudly showed me racks of plaid jumpers and white tops made for Parker, the Texas-based company that provides uniforms for private-school kids. since 1931, said the label. But it turns out that Parker shifted production to Cambodia more than a year ago.66. Parker’s website doesn’t mention that it makes its uniforms in Cambodia. “We design and manufacture in-house,” it says.

. . . .

The current crisis has caused even a few mainstream analysts to question the conventional wisdom about global trade. “What we call ‘free trade’ should be called ‘debt-financed trade,’” says Richard Duncan, chief economist at Blackhorse Asset Management in Singapore. “The whole world expanded industrial capacity in order to satisfy American demand for their products, which the United States bought on credit. We ended up with huge American trade deficits and the accumulation, during the past four years, of more dollars held overseas than had been built up in all prior history. That the bubble had to pop was obvious.” Duncan said that only the ability of the United States to run a $10 trillion deficit over the next five years will prevent a global depression. But in the long term, trade imbalances have to be corrected by increasing consumption in the Third World.

Duncan’s suggestion is simple: a “trickle-up” strategy, whereby wages rise — in Asia, beginning at a $5-per-day minimum, slightly above starting pay in southern China and more than twice the current rate in Bangladesh. Then, Duncan says, the wage could be raised by $1 each year for ten years. Imposing such a scheme would be quite simple to implement, he points out. The United States and the European Union could slap steep tariffs on imports manufactured by workers earning less than the minimum.

“If you sell a pair of tennis shoes for $101 instead of $100, no consumer in Chicago will notice the difference, but it will totally transform villages in Vietnam,” he said. “This is not a moral argument. We are currently on government life-support, but that’s not sustainable. We are going to have an international depression if we don’t figure out a way to create new sources of global demand—in which case, all those apparel companies are going to go out of business anyway.”