Phasing out of MFA and its Impact on Workers

1 Background

3

Better Factories

• What is it? • Anyone heard of it?

5 mins brainstorm

4

Cambodia• 13 million people• 260 000 workers• 80% of Cambodia’s exports• 230 factories• 70% owned by Chinese speakers• 70% exports to US• Per capita income is US$27 per month• Average garment wage = US$72 per month• Directly supporting 1 million people• 30 – 50% salary sent home to family

5

Objective

• Increased firm level compliance with Cambodian and international labour law

= better working conditions for workers

= reduce poverty= win:win:win:win

6

Background• 1999 US Cambodian Trade Agreement• Quota access for compliance• Possible 18% increase • ILO executing agency to monitor and

report• Project January 2001• USDOL funding, GMAC, Govt• Govt links export license to registration

with the project

7

Discussion point

• Why do you think that the project was controversial when it started?

Descriptionoverview

9

Remediation cycle

Monitoring

Suggestions

Capacity Building

10

Role of unions

• Members of PAC• Mainstreaming social dialogue• Monitoring• Training• Resources• Direct support

Videodiscussion point•List things you want to know or discuss

MonitoringHow it works

13

Monitoring

• 6 teams • unannounced visits• Agreed checklist over 500 items• interviews management, workers

and unions• Falsification checking

14

Discussion point

• Contact with auditing firms?• Do they talk with union leaders?• Impressions?

15

Monitoring reports

• 15 synthesis reports • Each factory given a report • Buyers can request reports• Monitoring plus• Factories named• independent, transparent and

credible

16

Key aspects of the labour law

• Handout – see fact sheet about the industry

• Discussion point – how does this compare to factories in your country?

17

Key findings

• Handout 1• Discussion point – how does this

compare to factories in your country?

18

Supplementary research

• Harassment• Personal security• Health and OSH• Breastfeeding• Dispute resolution

19

World Bank Survey of Buyers on Labour Standards• #1 for deciding to source from a country• Cambodia #1 compared to competitors• 60% - labour standards equal or more

important that price, quality and lead times

• 86% - moderate to critical importance to consumers in the future

• ILO monitoring highly credible• See fact sheet

20

Post quota

• See fact sheet• Still early days• Buyers consolidating• Price, quality, lead times and

compliance

Trainingapproach

22

Role of unions

• Training reference group• Joint training• Offer separate support to unions• Tri-partite delivery in some training• Mainstream social dialogue

23

All Better Factories Cambodia training is:

• Usually joint management and union

• Adult-centered • Action-based• Conducted in a safe and supportive

environment• Multi-lingual (depending on target

group)

24

Different levels

• Modular training• Single issues• Induction training• Factory based training

25

Modular• 20 factories• 7 modules (Globalization, Workplace

Cooperation, Quality, OSH, Productivity, HR and continuous improvement)

• PICC• Factory action plans• 2 plus one training• Document

26

Outcomes of trial

• Case Study• Currently tracking indicators

27

Output

350000500000

0

200000

400000

600000

Before(per month) Now(per month)

28

Working Hour

312

260

200

250

300

350

Before(per month) Now(per month)

29

Worker's Salary

60

70

5560657075

Before(per month) Now(per month)

30

Workers dimission

6%

2%

0%2%4%6%8%

Before(per month) Now(per month)

31

Buyers

2

6

0

5

10

Before Now

32

Single issues

• Modules offered separately• Working time• Induction training skills• First aid• Sexual harassment

33

Kit for HR managers

• 15 minute video• Comic books• Training kit• Train HR managers

34

Factory Based Training

• Targeted to young women with low literacy

• Soap opera style• Supported by comic books• Tri-partite delivery• Show on TV

35

Discussion point

• Positives and negatives of joint management/union training

• Does training mean changed behavior?

Pairs and report back

ResourcesMaking them available

37

Guide to the labour law

38

Website

39

Good Practice Sheet

40

Newsletter

41

OSH Manual

42

Industry Post MFA Strategy

• Market niche of good labour standards• Reduce corruption• Trade facilitation• Improve business environment• Improve quality and productivity• Improve skill levels• Increase Khmer management expertise

Labour standards is not enough

43

Project strategy

• Refocusing to providing info to international buyers to inform sourcing decisions

• Increased emphasis on remediation• Reducing duplication of monitoring• Building business case• Self sufficient national organization

by 2009

44

Information Management System

• presentation

45

Agreed Sustainability Strategy

2004 2005 2007 20082006 2009

Current

transition

handover

2010

Lessons LearntEngaging with CSR

47

Industry…

What matters is:• Price• Quality• Lead times• Compliance with labour standards• Innovation and whole service

48

Context

• Improving working conditions key to pro-poor development

• CSR and monitoring will grow• Monitoring is not enough• Must support freedom to organize

and collectively bargain

49

Buyers

• Engagement of buyers is critical• Not all buyers are the same• Important leverage point• Quality of buyer audits and

engagement varies• Risks involved

50

Progam design• Independent, credible and transparent• Strong government and buyer support • Use local staff• Mainstream social dialogue• Incentives and enforcement• National or geographical approach• Tri-partite approach• Reduce duplication of monitoring• Engage with buyers and other stakeholders• Emphasis on training and improvement• Consider language

51

Challenges• Claiming too much• Monitor up to the factory gate• Corruption• Good governance and rule of law• Lack of tolerance of opposition• Freedom of press• Union corruption and division

52

….it is not a panacea