Working under appalling conditions with no legal rights - Report on the labour situation in Georgia’s garment industry
Bettina Musiolek
www.ostwind-institut.de
www.cleanclothes.org
October 2011
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Bettina Musiolek
Working under appalling conditions with no legal rights - Report on the labour situation in Georgia’s garment industry
This report is written on the basis of various interviews, talks and seminars with labour-related actors in Georgia, such as:
• Talks with central and regional representatives of
the Georgian Trade Unions Confederation GTUC, of the Solidarity Center AFL-CIO, the South Caucasus Office of the Friedrich-Ebert-Stiftung, July and October 2011
• Extended interview with three former BTM-
TEXTILE-workers, October 2011
• Labour-rights training for 20 garment workers of
5 Georgian companies – on the request of GTUC, October 2011 in Kobuleti The training was carried out by Jenneke Arens (the Netherlands), Bilge Seckin Cetinkaya (Turkey) and Bettina Musiolek (Germany).
• STREETNET – ITUC-PERC, CCC and ILO joint workshop on "Organisation of work-ers in the informal economy“ in the region of the Community of Independent States (former Soviet Union), July 2011 in Tbilissi – this workshop was the third in a series of seminars on the informal economy in Eastern Europe and Central Asia which were jointly organised by StreetNet, ITUC-PERC, WIEGO and CCC with the support of Friedrich-Ebert-Foundation (November 2008 in Warsaw, Poland, and April 2009 in Bratislava, Slovak Republic)
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Bettina Musiolek
General situation: Georgia is situated at the Black Sea in the South Caucasus between the Greater and the ‘Lesser’ Caucasus Ranges, is rich in nature and history with Roman and Greek origins, second oldest Christianity (early 4th century and still a unique orthodox church with unique polyphonic music) as well as fertile land and favourite climate. Ancient trade routes from Mongolia, India, China to Europe crossed Georgia. During the more recent history Georgia had been inbetween the Ottoman and Russian empires. During the Soviet Union Georgia had been a Soviet Republic, which was more independent and self-sustained compared to other Soviet Republics. Georgians are culturally, in their education and their overall mentality distinct and advanced. After the Soviet Union had fallen apart a state of transformation emerged in Georgia that lasted throughout the period of Shewardnadze’s rule – until 2003/2004. This transforma-tion was characterized by a vacuum where „everything was possible“ – the old system did not work anymore and a new one was not yet working. Similarly to the other transition countries of Eastern Europe and Central Asia, the longer this period lasted the more cor-ruption and lawlessness was ruling. The present president Saakashvili came to power in 2004. He established an extreme neo-classic, neoliberal system inspired by and trained in the US. The government is seen as the voice of the oligarchy. During the last 20 years 1 Mio people have left Georgia, about 5 Mio people live in Georgia. International attention Georgia gets considerable international attention mainly because the oil pipelines from the Caspian Sea are crossing. Georgia is an important transit energy country. Additionally EU and US see Georgia as counterweight against Russia. This quote shows the considerable US interest in the country:
“Georgia is one of the first countries to receive a compact, in the amount of $295 million over five years, from the United States Millennium Challenge Corporation (MCC). MCC offers grant assistance to countries that meet certain requirements for good governance and commitment to reform. In 2004, Georgia's debt to the Paris Club was restructured.” (http://www.conservapedia.com/Republic_of_Georgia)
Socioeconomic situation: Just like all other transition countries, there is a huge lack of indigenous capital simply because there was no capitalism. There is not a single Georgian bank operating in the banking sector, there is hardly any Georgian company owner and the government did not implement any rule on Georgian ownership of companies or land purchased by foreign-ers. Many companies in Georgia are owned by Turkish persons or companies.
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Bettina Musiolek
Saakashvili “promised to reorient the government and the economy toward privatization, free markets, and reduced regulation, to combat corruption, to stabilize the economy, and to bring order to the budget. The government reduced the number of taxes from 21 to 7 and introduced a flat income tax of 12%. It significantly reduced the number of licenses a business requires, … The government intends to completely eliminate import duties by 2008, which should reduce costs and stimulate business. The World Bank recognized Georgia as the world's fastest-reforming economy in its 2007 "Doing Business" report.” (http://www.conservapedia.com/Republic_of_Georgia)
The government sells virtually everything that is marketable. It tries to attract investors by low social and labour standards, low land and estate prices and low energy prices. Land-grabbing is taking place – similar to the one going in Africa or Latin America. The former Soviet industrial sector is almost non-existing anymore. Like in all other tran-sition countries a dramatic de-industrialization took place. “By the end of 1996, Georgia's economy had shrunk to around one-third of its size in 1989” (http://www.conservapedia.com/Republic_of_Georgia). The national currency got dramatically devaluated. Georgia’s government has refused to have an ILO Decent Work Country programme which usually countries have. Unemployment, informal and precarious work There are state social programmes for unemployed but it is impossible to live on this. In 2008 a „tripartite commission on social dialogue“ was established. People say that there is 70% unemployment, which more or less means that there is 70% informal economy / informal self-employment and subsistence agriculture in order for people to survive. A minority is employed – mostly in the public sector and in the garment industry, oil port, construction, communication, banking and other services. Also in these companies many people are what is called “freelancer”. Employees have no labour contract. While workers are mostly very well educated and overqualified, they are scared, pressur-ized and arbitrarily treated. Many workers migrate or are being trafficked predominantly to Turkey. They often work in agriculture. People are ashamed to speak about their family members who are migrant workers in neighbouring countries. In general, transition also in Georgia confirms what UNDP’ stated in 1999 (Human Development Report 1998): "the most acute poverty and welfare reversal in the world". Poverty and exploitative work situations are prevailing. Trade union Georgia has a modern and active trade union. Under the prevailing circumstances, organ-izing efforts face intimidation, threats and dismissals by management and police assaults. Workers themselves are extremely scared and reluctant to organize. The Georgia TU Confederation GTUC consists of 22 branch unions. Many of them face intimidation by the government, particularly the previously powerful teachers’ union. The GTUC president received death threats; TU leaders are personally intimidated. The Government tries to set up yellow unions and refuses to consult with GTUC.
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Wages, subsistence minimum and living wages The pension for all is 90 Lari. The legal minimum gross wage is for public servants: 135 Lari (appr. 60 €)
for workers 40 Lari (appr. 18 €) Incl 20 % tax. A state/ obligatory health insurance does not exist. That means wage does normally not include health insurance. The labour ministry, which means the prime minister’s office determines these thresholds. We asked several people for the legal minimum wage but nobody knew that it exists. According to the government the subsistence minimum is 115 Lari. These are salaries of public employees:
Garment workers 100 – 250 Lari (45 – 120 €) teachers 200 Lari
Adjara government employees 1200 Lari Adjara ministry employee 1000 Lari We asked workers for living expenses and these are the
results: For a family of four: 2300 Lari (1100 €) Food and transport for 2 persons: 400 Lari Rent (1 person) 100 Lari Health insurance (1 person) 25 - 70 Lari
These figures were jointly developed during the labour-rights seminar in October in Kobuleti.
The Georgian Labour law The labour code was adopted in 2008, consists of 15 pages and its notion and tone is rather that of a business contract. It deprives workers of rights rather than granting them. Compared to the labour code of the former Soviet Union it is the other extreme: the most deregulated and rights-depriving law in the world. The Labour Code
- does NOT specify an obligatory length of the working day or working week, - does NOT specify an overtime bonus, - does NOT specify any length of leave, - allows for wage deductions without giving possible reasons, - does NOT specify organizing and Collective Bargaining rights, - does NOT specify possible and impossible reasons for dismissals or compensation
obligations. Furthermore the Labour Code forsees a “Coercive Suspension” that leaves room for any arbitrary dismissals.
Given the socio-economic situation in Georgia this only means that all terms of employ-ment are arbitrarily (mis)used by the employer.
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What did GTUC do about the labour code and the labour situation? GTUC is organizing demonstrations – the last one took place on October 1st 2011 with 15.000 people. For its violation of ILO core conventions, GTUC complained to the ILO. ILO filed a formal complaint against Georgia on C 87 + 98. ILO monitors Georgia. However, the GTUC president was obstructed when he wanted to appear in Geneva for the com-plaint proceedings. For ITUC Georgia is a priority case. ITUC and ETUC asked the EU to use GSP (General System of Preferences – a trade system of EU and US towards outside countries) for Georgia as leverage. On behalf of GTUC in Febr. 2011 AFL-CIO filed a complaint under the US GSP. In these efforts the GTUC is supported by the Friedrich-Ebert-Foundation and the AFL-CIO Solidarity Center in Tbilissi. The garment industry: Starvation wages, no labour contracts, excessive working hours, unionists intimidated There are 12 registered garment factories in Georgia with about 5.000 workers. Similar to other transition countries of Eastern Europe, the former textile and garment industry sur-vived as sewing shop subcontracted within global supply chains. Georgia’s exports are mainly agricultural products, raw materials and garments. Example: Autonomous Republic of Adjara In this South-Western region at the Black Sea bordering Turkey the industrial sector con-sists of 5 garment companies with about 1700 mostly female workers – all in Turkish ownership – and an oil terminal in the port. Case "Batumi Textil" Ltd. (main buyer Marks & Spencer) Similar to other transition countries there are a few garment and textile companies re-maining from socialist times. In Batumi for example there is BATUMITEX. 70% are still TU members. However, in general the conditions are not considerably better than in unor-ganized companies. The union members say that they are pressurized and silenced by management when they raise demands. About 700 workers work in 3 departments. Workers work normally 49 hours a week. They have to work overtime (beyond 49 hours) and on Saturdays. Overtime is not paid. Sick leave has to be compensated by unpaid overtime. They earn between 200 (seamstress) and 400 Lari (supervisor) (100 - 200 EUR) under piece rate system. The employer pays private health insurance for workers, which is very not the rule. Men are working in the cutting department and earn more than their female colleagues in the same department and more than seamstresses. Workers don’t know their labour contract. Since 2004 the owner is Turkish, lives in the UK and has his main company LOWPROFILE in Bursa. This company has subcontractors in Georgia and Bulgaria.
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LOWPROFILE sells women’s clothes to MARKS & SPENCER under its labels PERUNA, AUTOGRAPH, HAWES&CURITS. We calculated that workers work one hour a week for their wages. The equivalent of their wages is produced in one hour. Case “BTM Textile” in Chalwatschauri Opened nearby Batumi in 2008 and recruited qualified workers from BATUMITEX with wage promises. 800 women work at BTM in cutting, packing, sewing, ironing. It is the second largest factory opened by Turks: shop “SANTA” on first floor, production on 2nd floor. Sometimes only sewing jobs executed under re-export to EU. Workers had to work 7 days a week; sometimes 24 hours in a row – without being informed in advance. When workers fainted and were knocking at the door to get out, it was locked. Only during breaks workers were allowed to drink water. A woman who was feeling sick was not allowed to take medicine. Workers could not go to the toilet without permission: with a “toilet card”, so that everybody knows and sees who visited the toilet. This was generally possible only during breaks. Workers had to wear uniforms and in winter or during the night when it was very cold they could not put on jackets. According to the labour contract they were supposed to earn 250 Lari, but they re-ceived 150 (70 EUR) in piece-rate and quota-system, sometimes only 100 Lari (45 EUR) per month including overtime. Overtime bonus was never paid. In case of any disobedience: 15 Lari (7€) wage deductions. Workers were not allowed to read their labour contract. One time visitors (investment promotion programme on TV) came to BTM and work-ers were instructed what to say. With the help of the police management undermined any organizing effort. Organiz-ers were dismissed. There were court proceedings – but they lost. The owner said that workers could come back to work if they quit TU membership. GTUC took the case to the ILO. Case Adjara Textile (main buyer PUMA) Adjara Textile in Bobokvati is situated between Kobuleti and Batumi. PUMA’s en-gagement in Georgia is said to be facilitated by the government. AT this factory also organizing efforts were obstructed by management with the help of authorities.
Marks & Spencer and PUMA are global brands / retailers that are members of Multistakeholder Organizations for Workers Rights: - M&S in the Ethical Trading Initiative ETI in the UK and - PUMA in the Fair Labour Association FLA in the US.
