It is currently vital to implement restrictive regulations in the textile sector so that a truly responsible industry can emerge and contribute to the development of textile producing countries while respecting human rights.
The textile industry is a major source of employment in developing countries. While it has helped several million people rise out of extreme poverty and women make up 85% of the sector’s global workforce, these workers have joined the ranks of the working poor throughout the world. Ongoing systemic violations of fundamental rights in the workplace have also been caused by a number of phenomena; liberal globalization spurs on the extension of value chains, multinational corporations practice outsourcing to obtain the lowest possible production costs, there is a lack of regulation and too much trust being placed in the voluntary efforts of companies. However, consumers and civil society both nationally and internationally have driven the rise of restrictive legislations which should eventually become the prerequisite for a responsible industry.
This progress is indispensable because the widespread use of subcontracting in the textile sector has led to a huge decline in working conditions and a wage stagnation in producer countries. The end of the Multi-fiber Arrangement in 2005, brought about further liberalization to the sector and accelerated competition among workers and social dumping. Regulated in particular by the conventions of the International Labor Organization (ILO), human rights in the workplace are the most-often violated.
Widespread human rights violations in the workplace
The collapse of Rana Plaza in Bangladesh in 2013 stands out as a symbol of the textile industry’s broken promises. With its extremely cheap workforce and a massive production capacity, the country stood out as the new El Dorado in the 2000s for international outsourcers (who place orders through subcontractors). The country still has one of the lowest minimum wages in the world for the industry ($80 per month).
The value of these countries’ development models is called into question by the tragedy of Rana Plaza. Encouraged by bilateral free trade agreements, Bangladesh based its comparative advantage on the cost of its workforce instead of instead of investing in an industry that creates gainful employment. While the textile industry represented 45% of industrial jobs in 2012, it only contributed to 5% of the country’s national income. This model shows the limits of excessive specialization, spurred on by liberal globalization, for countries in low added-value sectors focused on exports.
The persistence of massive human rights violations in the workplace in countries involved in textile subcontracting demonstrates the failure of corporate social responsibility (CSR) policies. The tragedy of Rana Plaza occurred, in fact, 20 years after the extension of codes of conduct and social audits, triggered by the Nike scandal in 1996. The codes of conduct for major international outsourcers, which were non-binding, placed the risk and responsibility, in general, on third parties, suppliers or subcontractors. By refusing to modify the sector’s very lucrative business model in terms of the pressure on costs and lead times, just-in-time production and volumes, the voluntary CSR initiatives only led to low-scale improvements.
Social vulnerability increased by COVID-19
Additionally, poverty wages have become the norm in producer countries. They are set at well below the living wage, a sum which allows workers to provide for their basic needs and those of their family (such as housing, health care, food, education, transportation and savings). According to the Fair Wage Network, regardless of the living wage used for the comparison, the minimum wages in textile producing countries are two to five times lower than the living wage. Poverty wages are intrinsically linked to the textile industry’s current economic model, which is based on the production of constantly redesigned low-cost clothing collections, i.e. fast fashion, therefore requiring a low production cost.
This fact constantly reminds us of the violations of workers’ rights found in the sector. In 2019, the Australian Strategy Policy Institute (ASPI) think tank revealed in the Uyghurs for Sale report the forced labor of the Uyghur people in China, who produce clothing for major brands on the Western market. The COVID-19 pandemic reminds us furthermore of the extreme vulnerability of workers in the textile industry. In Asia, several million of these workers, deprived of wages due to order cancellations, have found themselves on the verge of starvation.
It has since been legitimately called into question whether the textile sector has the ability to participate in helping populations in developing countries rise above their impoverished state. And it is now vital to apply restrictive regulations on the sector so a responsible industry can emerge.
The textile industry: a restrictive framework that can change the model
For confronting the insufficient voluntary measures to prevent violations of basic rights and damage to the environment, there is general agreement over the need for restrictive regulations. However, many economic players still resist this need for change.
The lack of legal liability between the outsourcer and its subcontracting chain is, in this context, an outlier. Adopted in March 2017, the French law relating to the duty of care on the part of parent companies and outsourcing companies provides an initial response to this system failure. It is based on the United Nations’ guiding principles on business and human rights. Adopted in 2011, these guidelines define the responsibility of countries to protect people from violations connected to economic activities and the responsibility of businesses to respect basic rights. Above all, they acknowledge that multinational corporations are obligated to oversee all of their business relationships.
Thus, the French law now requires major companies operating in France to identify and prevent the human rights violations and harm against the environment that result from their activities, as well as the violations and harm caused by their subsidiaries, subcontractors and suppliers. For our association, the Éthique sur l’étiquette (ESE) collective, the implementation of their obligations as part of the law relative to the duty of care must furthermore be a prerequisite for the companies in question before they receive public financial support.
Ensuring that the textile industry contributes to the development of countries
On the basis of this new national and international framework, the ESE collective has drafted a list of recommendations intended for multinational corporations. They must end the continued lack of transparency into their value chains, which encourage improper practices and do not allow the consumer to make informed choices. They must at least provide simple, detailed information about their wage practices, the length of the work week, overtime and the presence of workers’ unions. This information must include all of these details relating to the company and all of their suppliers and subcontractors.
Furthermore, multinational corporations must implement their duty of care, procedures that aim to identify, prevent and remedy violations of basic rights and damage to the environment across the entirety of their value chain. They must publish a comprehensive, country-by-country risk map. Successive subcontracting and poverty wages are part of the inherent risks in the economic model set up by clothing outsourcers. They therefore must be identified.
No company can claim to ensure its duty of care without identifying in what way its model allows, encourages or benefits from social-dumping situations in the countries where it operates.
Respecting human rights: the crucial role of multinationals
A crucial question: Multinational corporations must ensure the right to a living wage for its garment workers by ending purchasing practices that end up putting pressure on wages. They must set their prices by basing them on the living wage, which can be determined from a credible and transparent indicator, such as the one developed by the Asia Floor Wage Alliance, and encourage trilateral negotiations that increase wages in producer countries. More broadly, the economic model based on fast fashion needs to be eliminated.
Finally, they must allow workers’ unions to be freely established and operated and they must respect the right to collective bargaining. Experience shows that the most effective oversight mechanisms are those that include worker representatives. International and sectoral agreements, like the one signed in 2013 on factory safety in Bangladesh, are tools for improving workers’ rights. Outsourcers must use their influence to demand that these rights be exercised among their suppliers and subcontractor or, if not, favor those who allow workers’ unions.
It is in Europe, through its duty to care guidelines, and internationally, through the United Nations treaty on multinational corporations and human rights, which has been negotiated since 2014, that the development and expansion of accountability standards for economic stakeholders has become a point of discussion. Rather than hinder the development of it, stakeholders would be well advised to support the initiatives that aim to regulate globalization or else risk finding themselves at odds with the awareness that is growing throughout the world.
The textile industry: a potential crucible for alternative models
A radical transformation to the industry is needed so that it can improve the quality of life of the most vulnerable populations. In addition to duty of care, we must question the models based on the low-cost/high-volume pairing, which to boost financial performance, lead to widespread violations of international labor norms and harm to the environment.
While the textile industry stands out today as a synonym for significant social and environmental impact, it can also be the crucible for alternative models and exemplary practices, as shown by the many initiatives in place. Consumers have not been deceived. They are turning away from brands whose models have a far too negative impact on people and the environment to instead support companies with responsible practices.
The opinions expressed on this blog are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.