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"I
eat propaganda,
With a side dish of promises.
Guess who am I?
That's me, the Indonesian worker!"
That's
what over 200 Indonesian factory workers sang as they
demonstrated in front of the Indonesian Labor Ministry
in January 1991. The workers, mostly women, were also
protesting against army involvement in the settlement
of industrial disputes. Right through the 1990s companies
like Nike, Reebok and Adidas as well as many other
North American and European companies earned extortionate
profits by exploiting such workers, taking advantage
of political repression of basic labor rights.[1]
Over
a decade later, the politics may have changed but
life for these maquila workers stays the same. In
November 2002, Indonesian garment workers called for
a boycott of the Gap company in protest at labor conditions
in Asia. One worker was quoted saying, "We are
treated like animals....We are abused if we do not
work the way the supervisor wants."[2]
What's
true in Indonesia is also the case in Central America
and the Caribbean. The apparel companies are ruthlessly
consistent in their unscrupulous efforts to fix the
outsourcing game in their favour. The origins of the
game lie in the 1960s.
Opening
moves: heads we win, tails you get massacred
1965
was a busy year for US foreign policy. Apart from
deepening involvement in Vietnam, in April that year
Lyndon Johnson put marines into the Dominican Republic.
Johnson moved to support the country's military dictatorship
against a popular uprising in favour of President
Juan Bosch, deposed by the military in 1963. Bosch's
supporters were on the brink of victory when the US
marines arrived. The intervention enabled the military
dictatorship to survive and implement yet more brutal
repression to wipe out popular opposition.
In
October that same year the US supported General Suharto's
military coup in Indonesia, leading there as well
to over twenty five years of corrupt tyranny. US officials
supplied information on opposition targets, facilitating
the massacre of up to a million people perceived to
be political opponents by the US-trained generals
leading the coup. Max Frankel of the New York Times
wrote at the time, "the Johnson administration
found it difficult today to hide its delight.... officials
were elated to find their expectations being realized."[3]
Those
successful attempts at murderous, repressive political
pattern cutting are still paying off. Forty years
ago media rhetoric depicted a heroic United States
saving the world from communism. Last year the unfortunate
peoples of Indonesia and the Dominican Republic enjoyed
the benefits of ranking 110 and 94 respectively in
the UN's human development index. Cuba ranked at 55.
Some
development numbers
Skewed
and failed international development policies ride
on the back of US intervention. International aid
bureaucrats clearly identify the problem. One Food
and Agriculture Organization (FAO) official was quoted
recently saying, "The role of capital is decisive...Investment
in agriculture is a precondition for growth in incomes
of the poor and the food supply."[4]
But policies imposed by anti-democratic international
financial institutions dominated by the United States
prevent poorer countries investing in agriculture.
Instead
they promote manufacturing for the benefit of wealthy
foreign and domestic elites. Agriculture as a share
of GDP in the Dominican Republic has declined by around
45%, falling from from nearly 20% in 1980 to just
over 11% in 2001. In Indonesia over the same period,
agriculture's contribution to GDP dropped by over
7% while manufacturing more than doubled. The effects
of these policies appear in income distribution.
In
the Dominican Republic, the poorest 20% of the population
earn just 5 percent of national income, the richest
10% earn nearly 40%. Over 30% of the population live
in poverty. In Indonesia, over 50% of people earn
less than US$2 a day. The wealthiest 10% of the country
receive about 30% of its income while the poorest
20% of people receive only 8%. These poverty levels
and extremes of income inequality hinder economic
development but provide a happy hunting ground for
predatory foreign businesses looking for cheap labour
in a business environment free of social and environmental
responsibilities.
Rules
of the game
The
effect of US interventions and the purpose of US-supported
repression from the 1960s to the present has been
deliberately to curtail people's fundamental social
and economic rights. In these countries, companies
have been able to take advantage of desperate poverty
to pay the lowest wages possible. They have also benefited
from cost-cutting manufacturing processes that pollute
the environment. The local police and army take care
of any protests. For these reasons, impoverished,
politically repressive countries like the Dominican
Republic and Indonesia were among the first to be
exploited by foreign big business using the maquila
system. It's true that maquilas are big employers,
with over 140,000 workers in export production zones
in the Dominican Republic for example.
But
sourcing their main inputs from overseas, paying poverty
wages and exempt from export duties, benefits from
these export production zones to local economies are
few. Over the last decade environmental problems and
the failure of free market capitalism to deliver sustainable
development have become increasingly self-evident
and embarrassing. Neglect of labor rights has been
a prominent feature. In April this year the ILO issued
a report citing 300 workplace accidents a day in Indonesia,
the worst record in South East Asia. This may or may
not be a direct result of the World Bank's notorious
East Asian Miracle report in 1994 which argued openly
and forthrightly for the suppression of free trades
unions.[5]
The
Indonesian variation - Dita checks Reebok
People
with the courage to organize and defend their rights
have made some gains. In Indonesia, worker's rights
activists like Dita Sari have been arrested and tortured
- presumably with the tacit approval of the World
Bank - for their attempts to organize labor unions.
In 1995, she was defending workers earning US$2 a
day or less, making shoes for companies like Reebok
and Adidas when she was detained and held for three
years before being released following the fall of
General Suharto. Suharto's dictatorship was sustained
for decades by Britain and the United States. Since
her release she and other determined workers have
worked hard to defend basic labor rights. [6]
People
like Dita Sari are very clear about economic realities.
Explaining her rejection of a human rights award from
Reebok in 2002, she stated, "In Indonesia, there
are five Reebok companies. 80% of the workers are
women. All companies are sub-contracted, often by
the South Korean companies such as Dung Jo and Tong
Yang. Since the workers can only get around $1.50
a day, they then have to live in a slum area, surrounded
by poor and unhealthy conditions, especially for their
children. At the same time, Reebok collected millions
of dollars of profit every year, directly contributed
by these workers... The low pay and exploitation of
the workers of Indonesia, Mexico and Vietnam are the
main reasons why we will not accept this award."[7]
How
it plays in the Dominican Republic
In
the Dominican Republic too workers have begun to make
gains in the face of repression and intimidation.
In September this year an International Confederation
of Free Trades Unions report detailed cases of attacks
on union activists. "There were eighteen members
of the union committee last year when Grupo M attacked.
Only one of them still works in the factory. After
they began to organize, the company brought two gang
members into the factory to begin attacking union
supporters. Union members were chased by the gang
members at work, and physically attacked with metal
tubes, hammers, and machetes." [8]
Even
so, in March this year apparel workers at the BJ&B
factory, one of the biggest maquila plants located
near the capital Santo Domingo, secured wage increases
and won management recognition for their union. The
union now has a collective bargaining agreement. But
maquila companies are responding to those hard won
gains by seeking cheaper more vulnerable labor elsewhere.
The
same Grupo M criticised in the ICFTU report is now
beginning to relocate apparel production to Haiti
with help from the repressive-business-friendly World
Bank. A look at international comparative hourly pay
(in US dollars) in the apparel industry for 2002 tells
some of the story.
Indonesia
$0.21
Vietnam $0.22
Bangladesh $0.28
Ethiopia $0.28
Pakistan $0.31
India $0.38
China $0.48
Haiti $0.49
Russia $0.70
Nicaragua $0.88
Colombia $0.94
Mauritius $1.25
Estonia $1.30
Honduras $1.50
Dominican Republic $1.65
Jamaica $1.83
Poland $2.07
Mexico $2.17
Israel $5.72
Spain $6.66
United States $11.11
Germany $15.20
Japan $17.29
Haitian
wages are a third of those in the Dominican Republic
and Honduras, half those in Nicaragua or Colombia.
And while double those of Asian competitors, Haitian
products have only to hop across the Caribbean to
Florida to enter the United States. Finished products
from China can take weeks to ship to the US market.
[9]
The
Haitian gambit
Another
part of the story is that World Trade Organization
rules mean that the Dominican Republic will have to
phase out tax exemptions for businesses in 2007. In
effect Haitian quotas and tax exemptions will be taken
over by Dominican Republic owned businesses to prolong
their tax holiday. In October, the International Finance
Corporation, a World Bank institution, agreed to loan
over US$20m to Grupo M, to build a factory complex
at Ouanaminthe on the Maribahoux Plain in north-east
Haiti.
This
business project shows up all that is wrong with international
development thinking. The deal was cut between local
elites in Haiti and the Dominican Republic and international
financial institutions under the influence of the
United States. Support for a volatile manufacturing
enterprise supplanted long term sustainable agricultural
production. The environment is being despoiled to
deliver short term benefits for remote corporate entities
while local people are exploited for their labor,
but without basic infrastructure, adequate health
or education services.
The
UN has already expressed concern about desertification
in north eastern Haiti. But the Grupo M project will
accelerate it. Around 1200 acres of agricultural land
and woodland will be devastated by the factories,
their supply roads and the effects of the inevitable
shanty towns that will spring up.
The
first factory at the new free trade zone near Ouanaminthe
opened in August 2003 with 300 workers making Levi's
Jeans. Grupo M expects to employ a total of 2,500
workers when the project is completed. Other companies
hope to start up plants soon. But as the project develops
employees are finding they are prohibited from organizing.
Workers have already been fired for seeking improvements
in working conditions.
The
IFC insists that Grupo M received the loan on condition
that it included the right to form labor unions in
its Code of Conduct. But Codes of Conduct have not
helped the Haitians fired for seeking better working
conditions. Nor did they help the hundreds of unionised
workers fired by the Tarrant-Mexico Ajalpan factory.
That factory shares clients like Levi's and Tommy
Hilfiger with Grupo M's plant at Ouanaminthe in Haiti.
Liz Claibourne and Ralph Lauren are other brands supplied
by Grupo M.
Umpires
and referees - paid to rig the game?
Multiple
labor rights recidivist Nike has also used advocacy
of industry-funded monitoring and Codes of Conduct
to cover up its failure to negotiate fair terms and
conditions for workers producing its goods. Just as
Grupo M is shifting labor intensive production to
Haiti so Nike is sourcing its labor intensive processes
in countries like China and Vietnam. As Jeff Ballinger
of Press for Change puts it, "...now that independent
unions have begun to gain some ground in Indonesia,
production is shifting inexorably to China. Simply
put, the very things that anti-sweatshop campaigners
put at the top of the list - defending workers' right
to organize and those workers' demand that Nike contractors
sit down in dignity to collectively bargain - have
been obscured by a blizzard of corporate self-reporting
and other Nike-financed artifices aimed at reassuring
consumers about the Nike corporation's high regard
for contract-workers' aspirations."[10]
These
Codes of Conduct and monitoring schemes stem from
pressure on multinationals. As the market model has
failed to meet people's basic needs, local populations
have organized to improve terms and conditions. They
have been supported by consumers in wealthy countries.
Companies like Nike, Adidas, Reebok, Liz Claiborne
and others have faced the prospect of either losing
business or doing better on labor rights and care
for the environment. But their response, promoting
business-friendly NGOs along with cosy social audit
processes, attempts to lull unwary consumers rather
than seriously address labor rights and environmental
concerns.
The
Council on Economic Priorities Accreditation Agency
(CEPAA) based in New York and London approves professional
firms to carry out social audits. Schemes like Social
Accountability 8000 (SA8000) offer business standardized
packages of training programs, guidelines and complaints
procedures. The packages are based on International
Labor Organization and UN conventions. But the scheme
provides for little or no input from independent NGOs
or workers' organisations. Self-evidently, auditors
are overwhelmingly influenced by the needs of their
corporate clients. Arthur Andersen and Enron are only
the most recent worst example of that. Other monitoring
schemes are the Fair Labor Association in the US which
morphed out of the Apparel Industry Partnership Accord
in 1999, the Ethical Trading Initiative Base Code
in the UK, and the Dutch Code of Labour Practices
for the Apparel Industry Including Sportswear.
Have
game will travel - Nike walks off with the board
None
of these codes and monitoring procedures alter the
fact that the only worthwhile substantive defence
of workers rights is a direct freely negotiated agreement
between workers and their employers. The recent behaviour
of the P.T.Doson company in Indonesia showed clearly
the uselessness of Nike's adherence to any code of
conduct. Nike had outsourced manufacturing to P.T.Doson
who made 7000 workers redundant when production was
cut back. Doson reneged on statutory obligations leaving
thousands of workers without adequate severance pay.
Indonesian
voices made the story clear to the Globalization and
Labor Rights Panel in Davos in January this year.
Ida Mustari a garment worker said, "After working
for nine years I earned approximately US$70 per month.
That was not enough to cover basic needs.... In September
2002 about 7,000 workers were laid off from PT Doson
when Nike stopped the orders and the factory was closed.
The Doson factory is refusing to pay workers the full
severance pay required by the Indonesian government.
Even if Nike is not required by law to contribute
to workers severance pay, Nike has a moral responsibility.
A lot of these 7,000 workers have families but they
can't support their families any more, while for over
10 years Nike has profited from our hard work."[11]
Union
representative Yeheskiel Prabowo explained, "Doson
Director Sin Jung Yang, claims that the factory, which
has been producing shoes since 1993, has routinely
filled complex orders that cannot be handled by other
subcontractors.... Nike also encouraged Doson to expand
and build a new factory. Yet when the factory was
expanded in mid 2001, Nike reacted by withdrawing
its orders, making the expansion pointless."[12]
Nike's
profits are based on the company's ruthless outsourcing
policy, chasing the cheapest wages from one country
to another as soon as workers organize to defend themselves.
Whether it's from Indonesia to China or from Dominican
Republic to Haiti, the story of greed and opportunism
stays the same. In the case of Grupo M, the greed
is funded by the World Bank's IFC.
Nike
is big enough not to need any funding to facilitate
its opportunism. Penniless, vulnerable workers yield
all the funds it needs. Yeheskiel Prabowo also said
at Davos, "We are concerned that just as free
and democratic unions are starting to emerge in Indonesia
and to campaign for better working conditions, foreign
investors like Nike are reducing their investment
and moving to countries where union rights are not
respected"[13], like China
and Vietnam.
Hey,
this looks like a good place - heads or tails?
But
even within China, having dumped its long-suffering
Indonesian workforce, Nike is pressuring suppliers
to cut costs. The only costs those suppliers can cut
are labor costs and costs incurred manufacturing responsibly
so as to protect the environment. In November this
year the Standard and Poor's rating service assigned
a BBB rating to the Yue Yuen company who supply Nike,
Reebok and Adidas. The company supplies around 17%
of the world market in athletic and casual shoes.
Yue Yuen have just issued a US$300 million bond to
raise capital. The bond matures in 2008.
Standard
and Poor's says, "Yue Yuen is controlled by Taiwan's
Pou Chen Corp., which has a 49.8% stake in the company,
and the Tsai family, which has a 19.9% interest. The
rating reflects Yue Yuen's leading market position,
low cost operations as a result of economies of scale
and low cost production bases, healthy internal cash
generation, and strong financial flexibility. These
strengths are partially offset by increasing pressure
on pricing from Yue Yuen's customers and high customer
concentration."[14]
In
plain laguage Standard and Poor's are saying that
Taiwan-controlled Yue Yuen, producing mostly in South
China, grind their workforce as hard as they can but
are still being pressed by Nike, Reebok and Adidas
to cut costs even more. And when the "high customer
concentration" firms like Nike, Reebok and Adidas
decide to cut and run, Yue Yuen will dump its workforce
just as P.T.Doson did in Indonesia.
As
Congressman Sander Levin stated in May this year following
a visit to Central America, "Efforts by American
retailer-purchasers to promulgate and implement private
business codes will not make up for a lack of a basic
governmental and societal structure.....The solution
has to be labor laws that are adequate, respected,
and enforced."[15] If people
in Congress had been making that kind of speech back
in 1965, millions of people around the world might
have avoided penury and had some chance of a decent
life.
Toni
Solo is an activist based in Central America. Contact:
tonisolo01@yahoo.com
NOTES
1. "INDONESIANS PROTEST PROPAGANDA DIET WITH
PROMISES ON THE SIDE" Reuters. Jakarta. 18
June 1991.
2. "Workers Call for Holiday Gap Boycott"
By IAN STEWART
The Associated Press State & Local Wire, November
28, 2002
3."Elated U.S. Officials Looking to New Aid
to Jakarta's Economy", Max Frankel, New York
Times, March 13th 1966
4.Hartwig de Haen, assistant director of the FAO's
economic and social department in Washington. Quoted
in "How the world is getting hungrier each
year" By Paul Vallely, Independent, London
26 November 2003.
5. "The East Asian Miracle". Report prominently
featured on the World Bank's web site, available
in paperback from the bank for $23.95.
6. "Running From Reebok's Hypocrisy" by
Alexander Cockburn, February 7, 2002.Los Angeles
Times
7. Statement by Dita Sari of the National Front
For Indonesian Workers Jakarta January 29, 2002
8. "Export Processing Zones: Symbols of Exploitation
and Development Dead-End"
International Confederation of Free Trades Unions
Report, September 2003
9. (Includes wages and fringe benefits) from Consulting
Network Jassin O'Rourke Group LLC of New York City
cited in "TROUBLES LOOM FOR CARIBBEAN PRODUCERS
WHEN THE WORLD QUOTAS ARE LIFTED IN 2005, GOODS
FROM ASIAN NATIONS WILL FLOOD U.S. MARKET"
By Doreen Hemlock. Sun-Sentinel (Fort Lauderdale,
FL) November 24, 2002.
10. "Spin to Win: How Nike Profits by Lies
and Distortion" By Jeff Ballinger, No Sweat
News, April 21, 2003
11. Yeheskiel Prabowo, FSPTSK Union representative,
Davos Globalization and labour rights panel, 27
January 2003
12. Ida Mustari, Worker at the PT Doson factory.
Davos Globalization and labour rights panel, 27
January 2003
13. OXFAM-Community Aid Abroad Press release "Footloose
Nike leaves workers rights behind" January
27th 2003 -
14. PRESS RELEASE: "S&P Rates HK Yue Yuen's
Convertibles BBB"
Hong Kong Standard & Poor's, November 28th 2003
15. "Central America Free Trade Agreement and
Beyond: Seizing the
Opportunities and Addressing the Challenges"
Congressman Sander M. Levin
Ranking Democrat, Subcommittee on Trade, Ways and
Means Committee
Speech before the Center for Strategic and International
Studies. May 19th, 2003
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