When you start looking into the world of fashion corporate social responsibility, it is not uncommon to stumble upon big game changers that somehow haven’t trickled down to the media. These are often actions taken by corporations out of necessity and have good timing to thank. International trade negotiations in Cambodia during the rise of their garment manufacturing sector are a clear example of this case, which I like to call “accidental ethical fashion”.
One thing I’ve learned since starting graduate school at NYU is that policies may seem to sometimes pop out of nowhere, but there is often a long history of hard work that is goes unseen. Interest groups and activist are waiting to pounce on those perfect, unpredictable opportunities to push forward their initiatives. It’s our job to be ready, and know how to mobilize quickly when those windows open.
In the case of Cambodia, and confluence of multiple factors led the country to be the first to partner with the International Labor Organization (ILO) to monitor labor standards in garment factories. This partnership resulted in working conditions in factories being directly tied to how many garments they were able to export. The pilot program sparked a new era for the ILO and Better Work organizations were formed in other countries to continue the program around the world.
Cambodia has grown from being completely a closed market from 1975 to 1989, to now having 32.65% of the global garment sector share. The country’s entry into the market in the early 1990’s allowed them to sidestep export quotas allowing their garment sector to flourish. The rapid growth in the industry led to growing pains in the workforce and when stricter trade regulations needed to be put in place in 1998 this allowed for the perfect climate to create the first ever trade laws developed to incentivize ethical labor standards.
During the 1990s when Cambodia was stabilizing, the government saw garment manufacturing as a low capital plan for economic development in their country. Cambodia looked to their neighbor’s economies booming after establishing successful garment manufacturing sectors and wanted to reap the same benefits. The state had a large population of unskilled workers looking for jobs and the garment industry’s low barrier to entry was ideal. Minimal capital investment and training were required to get the industry started, so Cambodia jumped on the opportunity to bring economic prosperity to their people.
Seeing the opportunity to work around the Multi-Fibre Agreement (which set strict export quotas in other countries), investors from Taiwan, China, and South Korea descended on Cambodia to build garment factories and attract foreign brands who were limited by quotas system in other countries. This served Cambodia well, and the market grew rapidly from $80 million in exports in 1996 to $6.8 billion in 2015. The rise of Cambodia’s garment industry owes its success to their opportune timing of market entry. The lack of restrictions allowed them to thrive as other developing countries’ manufacturing sectors were dampened.
In 1998 when the US government faced growing pressure from domestic apparel manufacturers to impose restrictions on Cambodian garment imports, simultaneously Cambodian factories were experiencing increasing discontent from their workers leading to strikes and protests. News of the conditions in factories abroad prompted American supportive labor groups who in turn petitioned the US government to take action and review the claimed abuses of workers’ rights in Cambodian factories. This created the perfect climate for US and Cambodian governments to collaborate on a trade incentivized structure for monitoring working conditions in apparel factories.
With acknowledgment from all parties that government monitoring of factory labor standards was not credible, the ILO was approached to step in as a third party auditor. This was an innovative and groundbreaking partnership, at the time the ILO had never monitored private sector operations, nor had they been involved with on the ground audits of workplaces. The Director-General of the ILO at the time, Juan Somavia, cautiously accepted the proposal after much debate with the ILO bureaucracy and governing body. This agreement would prove to be successful and spark the Decent Work program at the ILO, which protects workers and advocates for fair wages and safe working conditions. The partnership also created a more cohesive ILO, and some would argue, more relevant in the increasingly globalized apparel supply chain.
The monitoring system faced some problems at the beginning, but they were amended quickly to ensure transparency and credibility. Firstly, the quotas were set for the entire garment sector in Cambodia, not by the individual factory, and it was not mandatory for factories to participate in the ILO workplace monitoring. This did not incentivize manufacturers to partake in the program, instead, they would be more likely to try and get a free ride off of other factory’s good efforts. Once this problem came to light, the Cambodian government limited availability of the export quota to the US to only factories participating in the ILO program.
Secondly, transparency of information was imperative for the industry but whether the ILO should name all factories by name or produce an aggregate report was left unresolved. In order to address this issue, the ILO came up with a two-step approach to their reporting. First, they would release a synthesis report of all factories, highlighting overall trends and problems that need to be addressed in the industry. Then, after a re-inspection for compliance, the ILO would name factories that weren’t complying by the ILO standards for labor rights and working conditions. This allowed for the transparency needed and did so in a more impactful way than comparable private monitoring programs.
The private sector responded positively to the ILO monitoring program, which allowed for risk mitigation for operating in Cambodia. Nike, for example, had left Cambodia due to labor rights scandals tarnishing their brand image. Once the ILO started their monitoring of labor conditions in factories, Nike returned some of their production to the country.
There have been debates whether these private sector fashion brands should financially support these initiatives since they are largely benefitting from them. This idea, however, raises issues of incentives. If the private sector is funding the monitoring, they could be driven by driving profits and improving public image, not necessarily by ensuring fair and safe working conditions. That being said, there is a trend in the market for brands to invest in complying with labor laws, so there is some hope that brands may become more invested in this effort in the future.
As the program continued to grow and response from the private sector was highly supportive of their efforts, Better Factories Cambodia was created to manage and oversee the monitoring program in apparel factories. This monitoring agency was founded in 2009 and has grown to offer training programs to help factories reach the ILO standards.
Although this ILO partnership was revolutionary for it’s time, we are still left wanting more. Working conditions in garment factories are still lacking, as seen by the mass faintings occurring in Cambodia in the summer of 2017. Now that we are creating better systems for monitoring and change, how can we inspire a higher level change in the way we conduct business?