European companies silent about their links to labour rights issues in Bangladesh tanneries

Leather tanneries in Bangladesh are well-known for their poor working conditions. Although it is clear that companies like Bristol, Scapino, and Wortmann (known for the brands Caprice and Marco Tozzi) source leather shoes from Bangladesh, whether they use leather from Bangladesh remains unknown. When asked, the companies did not answer. Questions to these companies on what they do to prevent labour rights risks in leather production, or to solve actual problems, also remained unanswered.

Martje Theuws (SOMO): “These shoe and leather brands’ supply chains remain hidden, while transparency and open communication should be the norm in such a high-risk sector. It is impossible to engage with buying companies about abuses in a country like Bangladesh if there is no public information about who buys what from where.”

For this research, SOMO contacted 13 shoe companies and 14 leather importers. Only six companies responded to SOMO’s questions.

Insecure, unhealthy, underpaid work

The Bangladesh Labour Foundation (BLF), an organisation that SOMO works closely with, conducted investigations into 26 leather tanneries in Savar, close to Dhaka. This research confirmed that labour rights are grossly violated in the production of leather in Bangladesh: very few workers have a contract; payment below the minimum wage is common; and working days are long. Workers in these tanneries also face severe health problems due to exposure to chemicals.

Ashraf Uddin (BLF): “Despite the efforts of the international labour movement, and the national plan of action of the Bangladesh government to address social security problems in this sector, much remains to be done. Foreign buyers of leather and leather products have a great responsibility in this regard. How they act towards producers and towards the government has a great impact on working conditions in the supply chain.”

Untransparent supply chain

It is extremely difficult to map leather supply chains from slaughterhouse to shop. Shoe brands, factories, tanneries, subcontractors, and leather traders together form an opaque web. This prevents civil society and others from holding buying companies publicly accountable for abuses in their supply chains.

Legislation on transparency needed

Since companies do not voluntarily share information about their supply chains, legislation is needed, according to the researchers. Upcoming legislation on corporate accountability at the European level and in EU members states that will oblige companies to conduct business with respect for human rights, the environment, and the climate should therefore also include firm provisions on supply chain transparency,” Theuws said.

Download Indecent work

Luxury brands must reveal the origin of their leather goods

Luxury brands including Armani, Versace, Michael Kors and Coach don’t provide key information on the origin of their leather products. An analysis carried out by SOMO shows that 35 out of 44 luxury brands examined do not publish supplier lists that show where they source their leather jackets, trousers, shoes, belts, gloves, bags, and other leather goods. This is concerning because the global leather industry is notoriously associated with labour rights abuses and environmental pollution.

Online table with the scores of the companies

Only a handful luxury brands give some information on the origin of their leather products. Among these are Bally, Zegna and Fendi. But there is still a long way to go. The information provided by these companies is far from complete. Meanwhile, most brands do not publish a supplier list at all, failing to meet even the most basic standards.

Martje Theuws of SOMO said: “Our analysis shows that companies in the luxury segment are particularly lagging behind. This is shocking. If a company knows its suppliers and supply chain, then there is no reason not to publish a supplier list. If a company does not know its supply chain, this raises serious questions about the company’s due diligence.”

The importance of supplier lists

Supplier lists are a well-established tool in the apparel sector, allowing different groups – workers, investors and consumers – to trace the origin of goods. Supply chain disclosure is considered an important step on the long road to ensuring decent working conditions.

Of the 100 companies SOMO reviewed in total, which included 44 luxury brands as well as footwear and other companies that sell leather goods, less than one-third (29 out of 100) publish a supplier list. Only 17 companies provide information on processing facilities and suppliers of raw materials. The luxury goods companies performed below average. Only 20 per cent of the luxury brands (9 out of 44) disclosed their suppliers.

Poor working conditions

Workers in the global leather industry often face harsh working conditions. Low wages, long working hours, and job insecurity are frequently reported in low-wage production countries. The chemicals used in the processing of leather can be toxic and, for workers who are not provided with proper protection, exposure can lead to serious health problems. Labour issues have also been reported in Europe, where migrant workers in particular may face poor employment conditions.

Very limited information disclosed by the brands

Not a single company in our sample discloses information on the wages that workers in their supplier facilities earn. A mere 4 of the 29 companies that publish a supplier list include information on indicators related to freedom of association and collective bargaining in these lists. In the luxury segment, only Zegna provides any information on these issues.

“These companies publish information and reports, some of which present very positive pictures of their corporate responsibility, but the failure to publish full supplier lists is problematic. Scattered information on supply chain issues does not allow for proper scrutiny. Such an approach can conceal as much as it reveals”, Martje Theuws noted.

Voluntary initiatives don’t enforce transparency

More than fifty per cent the luxury brands analyzed (24 out of 44) participate in voluntary multi-stakeholder initiatives or certification schemes.

Martje Theuws said: “SOMO’s analysis shows that these kinds of voluntary initiatives do not guarantee supply chain disclosure because they don’t enforce transparency on their members. Therefore, it is extremely important that upcoming legislation on corporate accountability at the European level and in EU members states should include obligations for companies to publicly disclose supply chain information.”

Investigating public information of 100 companies

For this analysis, SOMO selected 100 companies in the luxury goods and footwear segments in the leather industry. Additionally, we included a number of online retailers. Among these 100 companies are some of the largest players in terms of company size, turnover, and market share. SOMO used information from a range of public sources for its analysis, including company websites and the Open Apparel Registry. Together with our report, we are publishing a discussion paper on what kind of supply chain information companies should disclose.

SOMO asked Armani, Coach, Michael Kors and Versace to respond to the concerns about their failure to publish a supplier list. The companies did not reply.

Together for Decent Leather

SOMO’s investigation is part of the programme Together for Decent Leather co-funded by the European Union. SOMO is a participating partner in the programme.

Report: Employment and working conditions in Bangladesh’s leather industry

In this study among 120 tannery workers reveals severe labour rights risks in Bangladesh’s leather industry. Problems include low wages, health hazards due to unsafe working conditions, heavy pollution, insecure jobs and forced overtime. The survey was conducted by Bangladesh Labour Foundation (BLF) and (RAPID).

The survey shows that 111 of the 120 interviewed workers were employed on a non-permanent basis. Of the surveyed workers, 95 per cent were appointed without a signed contract or any other formal employment arrangements, which leaves them without any written confirmation of their employment terms and without any proof of employment. More than half of the surveyed workers (56 per cent) received a monthly wage that was less than the national minimum wage of Tk. 13,500 ($ 158) set by the government for tannery workers. Tannery workers toil for long hours, sometimes with forced overtime, and are subject to the whims of their employers because of scant union activism and weak workers’ representation. A lot of workers in Bangladesh’s leather industry suffer from health problems due to unsafe working conditions like skin diseases (28 per cent), shortness of breath (13 per cent), stomach ailments (32 per cent), and headaches (63 per cent). Three-quarters of those interviewed work without proper protective gear, and 79 percent lack training in how to use chemicals safely during tanning work.

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Campaign for Decent Leather

Working conditions in the leather industry in Pakistan, Bangladesh and India are very harsh. At the same time, western brands refuse to provide information about working conditions in their supply chain. Among them is industry giant Wortmann with its Tamaris brand. Simultaneously, Wortman places great emphasis on social responsibility in their marketing. We want to know under what conditions leather and shoes are produced and what the company is doing to respect human rights. Join us and send Wortman an e-mail.

 

Session: solutions to address social conditions in the leather-based garment supply chain

During the third UN South Asia Forum on Business and Human Rights, Together for Decent Leather is hosting the side session ‘Solutions to address labour rights challenges workers in the leather-based garment supply chain’. The session will take place on Friday, 25 March from 11:30 to 13:00 am GMT +6. During the session, the consortium will reveal first insights from newly conducted research on working conditions of leather workers in Bangladesh, Pakistan and India, who is responsible for solving the problems and what should be done.

The Session

In a panel setting, Mahmudul Hasan Khan (Bangladesh Labour Foundation), Farhat Parveen (NOW Communities Pakistan) and Pradeepan Ravi (Cividep India) will speak about vulnerable leather workers in their countries. What are the specific obstacles for homeworkers, women workers and tannery workers face? How to improve their living and working conditions? SOMO will share its preliminary insights from research on transparency of international brands producing leather garments and footwear and explain how advanced supply chain transparency is key to enhancing the social conditions for leather workers.

> Go to the webpage where the session will be hosted

Tamil Nadu footwear sector minimum wage revision: A reminder for global brands to pay living wages

Last year, in July 2021, the Tamil Nadu government notified the revision of minimum wages for workers employed in the state’s footwear manufacturing industry. This latest revision, although late by two years, assumes significance as it was announced at a time when workers in the sector were facing enormous hardships. While the state government revised the minimum wages, the key question is whether it is justifiable for the industry to continue to pay workers using minimum wages as the basis when they are still recovering from the debilitating effects of the pandemic?

Revised wages – does it make a difference?

As per the revised rates notified in July 2021, the minimum basic wage rate for an unskilled worker in Ambur is fixed at INR ₹4,843 per month. This is a 24 per cent increase from the basic wage rates fixed for this category of workers in 2014. Similarly, basic wage rates for other categories of workers in the footwear sector have also been increased proportionally. In addition to the increase in basic wage rates, all categories of workers are also eligible to receive a variable Dearness Allowance (DA) which is linked to the Consumer Price Index (CPI). At the outset this increment comes across as a progressive step towards increasing the wage standard for the industry, and any increment is a succour in these pandemic-ridden times. Nevertheless, it is pertinent to look at this wage revision in view of the current economic model.

The pandemic has made visible workers’ vulnerabilities in global supply chains like never before. Several studies have pointed out that low-wage workers do not have any savings to tide over crisis periods and they resort to borrowing money to make ends meet. One of the main reasons for this is the poverty wages that workers receive. It does not allow them to save for crisis periods. Since 2019, the rate of retail inflation in India has been rising consistently. In the last two years the average rate of inflation has been above six per cent. The price of essential commodities such as cereals, pulses, vegetables, fruits, meat and cooking gas has gone up. In light of this economic situation, the revision in minimum wages is nothing more than an eyewash that simply allows workers to sustain their hand-to-mouth existence.

Industry fixation with minimum wages

Low wages are one of the main features of employment in India’s leather and footwear sector. The main reason is that the industry prefers to use minimum wages as the basis for wage payment. Whereas in the footwear sector, a majority of workers are women who are not organised. Their lack of power to bargain makes it impossible to negotiate better wages with employers. This has resulted in stagnation of the wage rate for several years, leaving workers at the mercy of minimum wage rates set by governments.

The Minimum Wage Advisory Board set up by the state government decides the basic minimum wage rates.  It follows a set of rigid criteria pronounced in the Minimum Wages Act, 1948. In practice, however, its process has been critiqued for not being completely transparent and for not having enough consultations with workers or their representatives. The very fact that revised wages were announced after a two-year delay, and without any measures to compensate workers for back wages points to this.

While suppliers stick to paying only minimum wages, the shortcomings of this are not completely unknown to international brands who source from footwear units in Tamil Nadu. International brands rely on social audits to ensure compliance with social standards in their supplier factories. These audits use minimum standards prescribed by local laws as indicators of compliance. The result is that such an exercise reinforces minimum wage as the standard wage for supplier factories. Although international standards encourage brands to pay living wages in their supply chains, they have not made any visible efforts to move in this direction.

Paying living wages is the way to go

We know from studies that the purchasing and other business practices of brands, and the standards they adopt to monitor their supply chains have a direct bearing on working conditions in factories. Therefore, shouldn’t living wages be the basis of labour costing in manufacturing contracts, instead of minimum wages? Unless brands address this question, it is very unlikely that suppliers will make real efforts towards paying wages above the minimum floor wage. While there are various efforts by civil society actors to push brands to review their purchasing practices, what is really required are statutory interventions mandating them to pay living wages to workers. The proposed EU-level mandatory Human Rights and Environmental Due Diligence (mHREDD) legislation has a huge opportunity to address this gap. If this law is successful in making it mandatory for brands to ensure payment of living wages, it would pave way for addressing many other connected supply chain-related risks to human rights. In addition, the legislation should also obligate brands to implement effective grievance mechanisms for workers, and ensure that freedom of association is respected. Providing an enabling environment where workers have the opportunity to bargain collectively for better wages will also contribute towards improved working conditions. Finally, a robust and ongoing system to conduct human rights due diligence in supply chains involving all relevant stakeholders would go a long way in mitigating social risks and maximising social outcomes.

This blog is written by Pradeepan Ravi from Cividep

Battle over minimum wages in Pakistan

Over the past eight months, the government of Sindh province in Pakistan, employers, and labour rights organisations have been entangled in a fierce battle over minimum wage levels. Sindh province is an important hub for the production of garments for international brands, including leather-based apparel. Garment and leather workers risk coming out on the losing end of this highly politicised battle.

On 9 July 2021, the Sindh provincial government announced a new monthly legal minimum wage for unskilled workers of 25,000 Pakistani Rupees (approx. € 127 as per the exchange rate of 1 March 2021). This constituted a wage increase of no less than 43 per cent compared to the previous legal minimum wage of Rs 17,500, set in 2018. Workers’ organisations had campaigned for an increase of up to Rs 30,0000 per month, to compensate for prevailing poverty wages, high inflation, and the financial distress caused by the Covid19 crisis which caused many workers to lose out on months of wages.  Still, the increase announced in July 2021 was welcomed.

Employers putting up a fight

Employers in the garment industry, however, said they cannot meet the costs involved with the new minimum wage. They filed a case against this decision with the Sindh High Court claiming that proper procedures had not been followed. Employers argued that the Sindh Wage Board had recommended Rs 19,000 as minimum monthly wage and that Rs 25,000 is too much. A majority of factory owners are effectively refusing to pay the increased wage. They even threaten to relocate production from Sindh to Punjab province, where the minimum wage would be lower. Workers interviewed by NOW Communities, a Pakistani worker rights organisation that is part of Together for Decent Leather, confirm this picture.

Ongoing legal battle

The Sindh High Court upheld the provincial government’s July 2021 minimum wage decision, declaring that the Rs 25,000 wage was to be implemented retroactively from 1 July 2021. The High Court said that the provincial government was indeed competent to fix, announce and declare the minimum wage. At the same time, the High Court advised the Sindh government to improve current minimum wage procedures.

Employers did not give in. Under the flag of the Federation of Pakistan Chambers of Commerce, an appeal was lodged at the Supreme Court, which in an interim verdict overturned the decision by the High Court. The Supreme Court maintained that the Sindh government had not followed procedures correctly.

In January 2022, the Supreme Court issued its final verdict, directing the Sindh government and the Wage Board to reach an agreement on the minimum wage in the province by consensus within two months. In the meantime, as per the Supreme Court rule, employers in Sindh are obliged to pay Rs19,000 as monthly minimum wage for unskilled workers, based on an 8-hour working day, with at least one week of holidays per year, with effect from July 2021. For the Sindh government to implement this part of the Supreme Court’s decision, however, a written verdict needs to be issued, which the Supreme Court so far has failed to do.

What garment brands sourcing from Pakistan should do

At the international level, Clean Clothes Campaign (CCC) is calling on garment brands that source from  Sindh – including H&M, C&A, ALDI  Fruit of the Loom, Bestseller, Levi’s, Gap, and Mango – to facilitate the payment of a Rs 25,000 minimum wage by means of responsible purchasing practises and paying a fair price. All workers, regardless of their contract status, should be able to enjoy this wage level. CCC argues this pricing should extend to all orders being produced since 9 July 2021, the date when the minimum wage increase was first announced by the Sindh Provincial government. CCC furthermore asks brands to publicly commit to this good practice. As labour costs only constitute 3-5 per cent of the total production costs, brands should be able to cover such wage increase, while brands’ lack of action will undermine this vital step and increase workers’ vulnerability to poverty and debt.

Join our session on caste-based discrimination at the OECD Forum

On 21 February, we are organising a side session at the OECD Forum on Due Dilligence in the Garment and Foodware Sector:

Caste-based Discrimination: a salient risk in the garment and leather supply chains in South Asia

21 February 2022 | 12 – 13.15 CET

Studies of the garment and footwear sectors in key caste-affected countries such as India and Pakistan, have shown that a majority of those engaged in forced and bonded or child labour and/or hazardous working conditions in these sectors are Dalits (oppressed castes). During this session, results will be shared of recent research and on how caste-based discrimination displays itself on the work floor in South Asia. Participants will be equipped with tools to take action to protect and remedy human rights violations stemming from caste-based discrimination in their operations and supply chains.

The session will cover:

  • WHAT is caste-based discrimination and WHY is it relevant to international business?
  • HOW do the garment and leather workers in South Asia experience caste-based discrimination?
  • HOW can international business adress caste-based discrimination in their supply chains?

The session will have the format of a round table with presentations and active involvement of participants.

Speakers

  • R. Karupussamy – Rights Education and Development Centre (READ – India
  • Farhat Parveen – NOW Communities – Pakistan
  • Peter Mcallister – Ethical Trading Initiative (ETI)
  • Meena Varma – International Dalit Solidarity Network (IDSN)
  • Representative of European garment or leather brand sourcing from  South Asia (tbc)
  • Sandra Claassen – Arisa (Facilitator)

The session is organised by Arisa, Together for Decent Leather, ETI, READ, and IDSN. Join the conversation on Twitter: @idsnupdates // @arisafoundation // @ethicaltrade // @READSathy

A global call for full supply chain transparency in the clothing sector

This week, the world remembers the Rana Plaza tragedy. On 24 April 2013 more than a thousand workers lost their life in what was, in essence, a preventable accident. The accident shook the world and put a spotlight on the unsafe conditions faced by workers in global garment supply chains.

Companies have a clear responsibility to look at their supply chain, identify human rights risks and impacts and address them. A lack of visibility of supply chains can allow exploitative, unsafe working conditions and environmental damage to thrive while obscuring who has the responsibility and power to redress these issues.

As a first step, brands and retailers need to understand and disclose their own supply chain. Therefor, the consortium Together for Decent Leather joined the plea for increased supply chain transparancy. Together with a broad coalition, we call upon all clothing brands and retailers to disclose all the facilities in their supply chain.  We also ask regulators to provide for a level playing field, by setting harmonised legislation for such public disclosure and to ensure every clothing brand commits to the same level of transparency.

Download the global call

Session on vulnerable workers at the OECD forum on due diligence in the garment and footwear sector

On the occasion of the 2021 OECD Forum on due diligence in the garment and footwear sector, Together for Decent Leather is hosting the side session  ‘Together for Decent Leather – From precarious jobs to decent work’. The session will take place on Tuesday, 2 February, from 9:30 to 11:00 am. During the session, the consortium will discuss the most vulnerable worker groups in the leather garment and footwear sector, the key risks of labour rights violations they face, who is responsible for solving the problems and what should be done.

Vulnerable workers

The Corona pandemic has dramatically laid bare the vulnerable position of workers in global supply chains, including workers in the leather goods supply chain. Particular groups of workers (informal homeworkers, contract workers and daily labourers) in Asian production countries, such as Bangladesh, India and Pakistan, have been hit disproportionally.

The Session

The multi-stakeholder side session that is hosted by Together for Decent Leather will look into the causes and consequences of precarious and insecure work, and the challenges that vulnerable groups of workers face in this sub-sector of the garment industry.  The ways forward will also be addressed.

In the first panel, Pradeepan Ravi (Cividep India), Farhat Parveen (NOW Communities Pakistan) and Ashraf Uddin (Bangladesh Labour Foundation) will speak about vulnerable leather workers in India, Pakistan and Bangladesh. What are the obstacles homeworkers and tannery workers face? How to improve their living and working conditions?

In the second panel, Jürgen Janssen, head of the German Partnership for Sustainable Textiles (PST) will share how the PST addresses labour issues in garment supply chain and make parallels to the leather sector. Sara Brennan, head of Corporate Responsibility at Pentland will elaborate on the actions the fashion company takes to improve the working conditions for the homeworkers within its footwear supply chain. Gertrude Klaffenboeck (Suedwind Austria) will outline how today’s national governments, international policies and guidelines, as well as corporate policies largely fail to protect the rights and livelihoods of vulnerable leather workers and explain how mandatory human rights due diligence can make a difference.

> Go to the webpage where the session will be hosted

Together for Decent Leather is a three-year programme, carried out by an Asian-European consortium of seven civil society organisations. Their goal is to improve working conditions and to reduce labour rights abuses, focusing on leather garment and footwear production hubs in South Asia.