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Report of Supply Chain Study for the City of Los Angeles Sweat Free Ordinance Independent Monitor Agreement (Agreement No. C ) The following is a report of the Supply Chain Analysis conducted pursuant
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Report of Supply Chain Study for the City of Los Angeles Sweat Free Ordinance Independent Monitor Agreement (Agreement No. C ) The following is a report of the Supply Chain Analysis conducted pursuant to Section 5.3 ( Workplan ) of the above-named agreement. This report fulfills the associated deliverable, Section of the contract. The (WRC) has conducted an analysis of the manufacturing supply chains of items purchased by the City through its contract with Galls/Long Beach Uniform and through its contracts with nine non-galls contractors. This analysis was based on factory disclosure data that was reported by the subcontractors that are used by Galls/Long Beach Uniform to produce items for the City, as well as by the non-galls contractors and any subcontractors from which they purchase products. As the City is aware, the WRC is still waiting to receive factory disclosure information from a few City vendors; the WRC plans to update this analysis upon receipt of any additional factory disclosure information. During this contract year, a total of 171 factories in 23 different countries were disclosed as suppliers of products purchased by the City. Of these 171 facilities, 67 are located in the United States, 24 in China/Hong Kong, 59 in Latin America (Mexico, Honduras, El Salvador, Nicaragua, Costa Rica, Haiti, Puerto Rico and the Dominican Republic), 11 in South Asia (Bangladesh, India, Pakistan, and Sri Lanka), 7 in Southeast Asia (Cambodia, Korea, Taiwan, Thailand and Vietnam), 2 in Europe (Germany and Lithuania), and 1 factory in Canada. Appendix 1 contains a list of the number of factories per country and the percentage of City supplier factories located in each country. This report includes information about labor conditions in the following countries and regions: Bangladesh, Cambodia, Canada, Central America and the Caribbean, China/Hong Kong, Germany, Haiti, India, Korea, Lithuania, Mexico, Pakistan, Puerto Rico, Sri Lanka, Taiwan, Thailand, the United States, and Vietnam. For each country, we have included the number and distribution of factories in that country, background on the labor conditions, an analysis of monitoring priorities, information on the minimum wage for each country, and links to additional sources of information. Per the City s request, we have also added information about City supplier factories where the WRC has conducted monitoring work on the City s behalf that has resulted in positive impacts for workers at those factories. For the relevant countries, we have added a section entitled Positive Impacts at City Supplier Facilities. 5 Thomas Circle NW Fifth Floor Washington, DC (202) Fax: (202) Based on the WRC s experience in the countries where City supplier factories are located, and on research conducted for this analysis, there is a significant likelihood that violations of the City s Ordinance are taking place in many of the countries where products purchased by the City are manufactured. The following countries/regions have the highest risk of violations and therefore are high priorities for worker outreach and ongoing monitoring by the WRC: Bangladesh, Cambodia, China, Central America and the Caribbean, Haiti, India, Mexico, Thailand, and Vietnam. This report includes a summary of the conditions in each of these countries and the reasons for the WRC s assessment of the above countries as high level priorities for worker outreach and ongoing monitoring. BANGLADESH There are six factories in Bangladesh that have been reported as suppliers to the City. Three of these factories have been reported by Outdoor Cap, which supplies products to the City through Barry Kay Enterprises. Two factories have been disclosed by Edwards Garment, a Galls subcontractor, and one factory (Dada Savar) was reported as supplier to the City in three separate instances: once by Sanmar, one of the Galls sub-contractors, once by BUI Uniforms, which receives products from Sanmar, and once by Outdoor Cap, which supplies products to the City through Barry Kay Enterprises. Five of the factories are located in Dhaka, the capital of Bangladesh, where most of the country s garment manufacturing is located. The sixth factory is located in Chittagong, which is the second largest city in the country and is the site of the main seaport in Bangladesh. Bangladesh accounts for approximately 7% of all U.S. apparel imports. Labor conditions Working conditions in the Bangladesh garment industry are very poor. Workers attempting to organize and exercise their rights do so with the general background of state security forces which frequently kidnap, torture, and execute outlawed political opponents, government critics, or suspected criminals. Occupational health and safety is a serious issue in Bangladesh. From 2001 to 2006, factory fires killed more than 100 workers in total and injured many more in some of the worst accidents to befall workers in the garment industry in the modern era. The fires were in part due to violations of fire safety and structural integrity which persist in the Bangladeshi garment industry. Physical abuse and verbal harassment are also serious problems in the Bangladeshi garment industry. Verbal abuse of workers is widespread and physical abuse and sexual abuse of women workers also occurs. Forced overtime is quite common in the garment production industry and workweeks can range from 60 to 80 hours or more. Excessive, forced, and frequently under- or uncompensated overtime, as well as delay in payment and denial of leave benefits, are common in Bangladesh. Bangladeshi law limits overtime and requires payment of double the normal wage rate for overtime, but corruption is Page 2 of 28 endemic among labor inspectors and workers are commonly fired for attempting to enforce the provisions in the law. Finally, the right to freedom of association is often violated in Bangladesh. Unions are illegal in the country s Export Processing Zones (EPZs). A 2006 law does allow EPZ workers to form workers associations, which give workers a limited right to bargain collectively subject to certain constraints. In practice however, even these limited legal protections for workers rights of association in the zones are generally not respected by zone management. While the official ban on union activity imposed in January of 2007 by the military-backed caretaker government has been lifted, the practical impediments to forming and registering a union with the government have remained largely unchanged. Both inside and outside of the EPZs, workers are regularly subjected to harassment and intimidation by agents of the EPZs and national security agencies. Organizers face threats of physical violence and unlawful dismissals for union or associational activity without consistent or effective legal intervention. In 2008, police arrested WRC labor-rights monitor Mehedi Hasan for investigating worker protests. Significant international pressure was required in order to secure his release. in Bangladesh are extremely low, even when compared with other low-wage countries. The government announced a new minimum wage in 2007 covering all sectors not covered by industry specific wages at $0.14 per hour. Monitoring notes and priorities There is a very serious risk of violations at City supplier factories in Bangladesh. Bangladesh also represents a relatively large percentage of the total number of City supplier factories. As a result, Bangladesh will be a high priority for the WRC s outreach and ongoing monitoring work. Further reading U.S. Department of State Country Reports on Human Rights Practices: Bangladesh (2008). Human Rights Watch World Report 2008: Overview of Human Rights Issues in Bangladesh CAMBODIA There is only one factory in Cambodia that has been reported as a supplier of goods to the City. The factory is Medcrest Textiles and is a supplier to Medico Professional Linen Services, one of the non-galls contractors. The factory is located in Phnom Penh, the capital of Cambodia, where most of the country s garment manufacturing is located. Approximately 4% of all U.S. clothing imports are manufactured in Cambodia. Page 3 of 28 Labor conditions Cambodian workers continue to face serious labor rights violations in the Cambodian garment industry. Labor code of conduct and Cambodian law violations are particularly prevalent in the areas of minimum wage and benefits, work-hours and overtime, harassment and abuse, and freedom of association. Workers confront these employment issues in a country where the increasingly authoritarian government uses violence, intimidation, imprisonment, and sometimes murder to silence human rights workers, political dissidents, trade unionists, and journalists. Freedom of association violations are frequent in Cambodia, and enforcement of associational rights has been poor. Union leaders and organizers face threats, harassment, and in some cases have been assassinated. Workers who have exercised their rights to associate and form unions have faced dismissal, retaliation, harassment and threats, and the violence against union leaders has a powerful chilling effect on workers exercising their rights. In 2006, for example, there was string of violent attacks against union leaders at one of the largest garment manufacturers in the country, known as Ocean Sky, which produces apparel for many large U.S. apparel brands. Cambodian garment factories have continued to force or pressure workers into performing excessive and involuntary overtime. Cambodian law says that overtime work must be voluntary, for exceptional and urgent circumstances, and limited to two additional hours per day in most instances. In practice, however, WRC surveys have found workers reporting shifts lasting as long as 17 hours, with average overtime of 16 hours per week, making for a 64 hour average sixday workweek. Workers face fines, dismissals, or loss of premium pay for refusing to work overtime, and when they do work overtime they are often denied the premium pay the law requires. Another serious compliance issue in Cambodia is the misuse of short-term labor contracts. Some companies continue to use short-term labor contracts to miscategorize permanent production employees. In an increasing number of Cambodian garment factories, almost the entire workforce is hired on short-term contracts. This has the effect of avoiding the protections against discriminatory terminations and avoiding an employer s obligations to provide senioritybased pay, maternity leave, and other benefits as required by Cambodian law. The inappropriate use of short-term labor contracts to employ long-term production employees is a major focus of the WRC s work in Cambodia. in Cambodia are quite low. In April 2008, the minimum wage for the garment sector was raised to approximately $0.29 per hour. The minimum wage during the probationary period (the first two months of a workers term at the factory) is slightly lower. The base wage at every garment factory in Cambodia is set at the minimum wage, so there are at least some workers at every factory that do not earn more than $0.29 per hour. With bonuses, overtime work, and seniority benefits, workers can earn slightly more. Page 4 of 28 Monitoring notes and priorities Although there is only one City supplier factory reported in Cambodia, there is a significant risk of violations occurring in this country. Moreover, this factory has indicated that is plans to employ workers on short-term employment contracts, a practice that, while not uncommon, is associated with increased risk of labor rights violations. Cambodia supplies a substantial amount of apparel to the U.S. and it is very possible that additional factories in this country will be disclosed as the WRC receives additional factory disclosure data. Therefore, Cambodia is a highlevel priority for worker outreach and ongoing monitoring. Additional Resources U.S. Department of State Country Reports on Human Rights Practices: Cambodia (2008). ILO Better Factories Cambodia and World Bank Justice for the Poor Program: Women and Work in the Garment Industry (2006). 0Garment%20Industry%20(en).pdf Positive Impacts at City Supplier Facilities Beginning in October 2007, the WRC conducted a full investigation at the New Wide Garment facility in Cambodia, which was disclosed as a supplier to the City by Dickies. The assessment uncovered several serious labor rights violations in the areas of women s rights, freedom of association, wages and benefits, and occupational health and safety. Through a process of engagement with the City, the factory, and Dickies, the WRC was able to achieve substantial progress at the facility. This included the reinstatement in February 2008 of a worker leader who had been fired for attempting to exercise her associational rights. Additionally, the factory ceased the practice of discriminating against pregnant workers and provided workers with full access to toilets and the factory s clinic (access to these facilities had previously been restricted). The WRC has continued to engage in remediation and follow up monitoring at the New Wide facility. Based on worker interviews conducted by local WRC staff, it appears that factory management has followed through on their commitments regarding corrective action and progress has been made in several areas. Although there are some outstanding issues, the WRC s and the City s engagement in this case did result in several positive changes for workers at New Wide Garment. CANADA There are four factories in Canada that have been disclosed as suppliers to the City. Two of these facilities were reported by Gildan, which supplies products to the City through Ellen s Page 5 of 28 Silkscreening, one by Allstar Fire Equipment, and one by Ameripride. Three of the factories are located in Quebec and the fourth facility is located in Montreal. Labor Conditions Canadian compliance with national laws and international labor standards is generally good. Canadian workers have the legal right to join and form unions, and the government generally respects that right and enforces violations of that right. Health and safety standards in Canada are also generally good, and are enforced by the government. Canadian workers generally do not face verbal or physical abuse in the workplace, and are generally not subject to arbitrary withholding or non-payment of wages. Canada has room for improvement in terms of the minimum wage. The Canadian minimum wage ranges from $7.30 to $9.40 per hour and does not provide a decent standard of living for a worker and a family. Relative to wages in most of the garment producing countries that supply the City, however, Canadian wages are much higher. Monitoring notes and priorities Canada will not be a high priority for the WRC, since the risk of serious violations here is significantly lower than in other apparel producing countries. Additional Resources U.S. Department of State Country Reports on Human Rights Practices: Canada (2008). CENTRAL AMERICA AND THE CARIBBEAN There are a total of 26 City supplier factories located in this region: 13 in Honduras, 4 in the Dominican Republic, 5 in Nicaragua, 3 in El Salvador, and 1 in Costa Rica. There are similar labor rights problems in each of these countries; they are therefore being considered as a region for the purposes of this analysis. As a whole, this region is a significant supplier of apparel to the U.S. and represents more than 12% of total imports. Labor conditions Central America and the Caribbean show a similar pattern of labor rights violations throughout the region. National laws in each country provide adequate basic protections for workers rights of association; nevertheless, serious violations are common and are particularly problematic in the Page 6 of 28 export manufacturing zones. Intimidation and retaliatory dismissals of workers are common responses from employers to union organizing. In many countries, including El Salvador and Honduras, organizers and workers who form and join unions are blacklisted and are unable to find other employment. Blacklisting is disastrous for the workers in question, and has a powerful chilling effect on employees rights to freedom of association and forming of unions. While less of a problem than in some countries in Asia, unlawful forced overtime is also an issue in Central America and the Caribbean. After the expiry of the GATT, Central America has had lower production volumes leading to less need for excessive overtime. When workers do work overtime, particularly when filling quotas, they are often either not compensated at all or not compensated at the legally mandated premium rates for the country. Workers in Central America and the Caribbean are also commonly subjected to verbal abuse, sexual harassment, failure to provide legally mandated benefits, and failure to provide legally mandated severance when factories close. On top of severance, employers frequently owe workers substantial amounts in back wages and unpaid benefits. Factories often close quickly and without notice, sometimes overnight, and workers may have significant difficulty obtaining even part of the money they are owed. The minimum wage for each country in this region is quite low, although higher than the minimum wage in most apparel export countries in Asia. It is important to note that the cost of living in most of these countries is rather high when comparing it to the level of economic development. In none of these countries is the minimum wage enough to meet the basic needs of a worker and family. The following is a list of minimum wages in each country: in Costa Rica, the minimum wage ranges from $ $3.69 an hour depending on the industry ; in the Dominican Republic, the minimum wage is $0.80 per hour inside the EPZs where most garment factories are located; in El Salvador, the minimum wage is $0.95 an hour; in Honduras, the minimum wage is $1.65 an hour; and in Nicaragua, the minimum wage is $ $0.86 per hour and ranges by industry. Monitoring notes and priorities The Central America and Caribbean region will be a high priority for worker outreach and ongoing monitoring, both because of the high number of City supplier factories in the region and the high risk of serious violations of the City s Ordinance. Additional Resources U.S. Department of State Country Reports on Human Rights Practices (2008). Reports are available for all countries at Page 7 of 28 Positive Impacts at City Supplier Facilities Alamode The WRC began an assessment of the Alamode facility, located in Honduras, after receiving complaints of labor rights violations from a local non-governmental organization. The factory is disclosed as a supplier to the City by Lion Apparel. In response to the complaint, the WRC initiated a full investigation of the factory, which included offsite worker interviews, interviews with supervisors and managers, and a physical inspection of the plant. The assessment uncovered evidence of serious labor rights violations in the following areas: workplace health and safety, wages and benefits, overtime, and women s rights. Of particular note, the WRC found that the factory had engaged in a process of conducting annual mandatory pregnancy testing for all female workers, which is illegal under Honduran law and is a violation of the City s Ordinance. The WRC provided Lion Apparel with a summary of our findings and following their own inquiry, Lion Apparel ultimately agreed to take corrective action in most of the areas of noncompliance identified by the WRC. A verification audit conducted in December 2008 found that significant progress had been made in several areas, including: a retroactive payment of approximately $30,000 which was made to workers to correct the company s previous underpayment of the legal minimum wage; enrollment of all Alamode employees in the Honduran national health care system, which is required
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