Because of the bad publicity earned by importers such as Wal Mart and C&A after the recent factory fire in Bangladesh, more and more importers are considering social audits as a normal part of their supplier monitoring process.
In practice, I guess there are two factors at work:
- Some retailers are pushing for tougher standards, and the importers that sell into those channels need to satisfy this new demand.
- Some purchasers feel the need to cover their a** by ordering reassuring reports from well-known auditing agencies.
And, naturally, providers of social audits try to take advantage of these fears. Here is an example (link to source):
As professionals of this field know, a social audit report usually looks better than the true situation in the factory. There are four reasons for this:
- Many violations are hidden on the audit day, since the auditor’s coming is announced. For example, in that now famous Bangladeshi factory, exit doors were locked every day but were open during audits (by the way, I don’t think barred windows are considered a violation).
- Operators can be trained to tell lies when asked the most common questions. This is frequent in large Chinese factories.
- Top managers make sure fake payroll & attendance records are prepared. Again, this is quite common in China.
- Many auditors routinely get bribed.
I described all this before in social compliance audits: perverse effects. It has been going on for many years.
And the situation is probably worse in China, because of a fundamental contradiction:
- The law stipulates a legal working time and a maximum overtime per month (and it automatically becomes one of the requirements for the audit to pass).
- Most of the factory workers want to work a lot of overtime — well above the legal limit — to earn more money. If this is denied, they will switch to another employer.
It means 99% of manufacturers do not respect the law, and need to cheat to pass an audit!
Are there better solutions? Yes, I think so. Here are two ways a big buyer can improve working conditions without resorting to social audits:
- Push manufacturers to open a dialogue between management and workers, as Tchibo has been doing (read about their program).
- Push manufacturers to improve their productivity, so that workers can earn their target salary while respecting the legal working time limit. I heard a few cases where this is happening.
The main constraint for importers comes from their customers’s requirements. If they are free from these constraints, there ARE alternatives to social compliance audits.
I agree, Renaud! I have coined the phrase “The Broken System”
for the contradiction that occurs between what is takes to obtain business and what
it takes to sustain business. Everything the customer (retailer) requires to
obtain business, (cheaper, cheapest prices and faster, often unachievable
delivery dates) is the driving force for the lack of social compliance; i.e. falsified
records, workers coached to lie, bribery, all to receive a passing audit score
to sustain business. For a retailer, audits are nothing more than checks and
balances; a publicity safety net so that if and when a “Bangladesh” occurs, they
can pull out their trail of papers to cover their A$$ and blame the third party
inspection company or manufacturer. Anyone who has done an ounce of business in
China or any other third-world country knows that real changes come from
transparency, which takes time to develop, and by setting reasonable goals achievable
over time, not a CAP returned within 3 days. Part II of “The Broken System”,
which of course is all based on my opinion and experience, is damn PRC Law.
Again, anyone who has spent an ounce of time in China and is at all familiar
with China’s Labour Laws, would be completely validated to ask, “ Who wrote
this for China? Are we talking the same country?!” Talk about totally disjointed-
40hour work weeks with a maximum OT of 9hours?!?! Has the person, who wrote this,
ever been to China? I exchanged 4 emails yesterday with a retailer over locks
on the bathroom doors, “Per PRC Law”. Wait, bathroom doors, in China?! I should
add that this is after the factory was required to segregate the bathrooms…then
add male/female signage, can’t forget those!…then install privacy walls between
the toilets…wait…. doors would be nice, don’t you think?! yes! let’s add those!…
now, we’re at locks…Don’t get me wrong, I am all for developing a country, (and
having a better bathroom accommodations when I am there) but THAT + Cheaper
Prices, hell, even the same prices do not ≠. So, that’s where China screws themselves. In all
fairness, a US retailer can’t go into China and break the laws, pick and choose
what’s applicable and what’s not. China is the one not implementing and mandating
their own laws, because business and growth, even at the expense of their own,
is more important. I just wish everyone would get on the same page! We’re all
stepping over one another to get nowhere!
Absolutely true.
The analogy I would use is that of the Tour de France. Every insider knows that every rider takes illegal substances to boost their performance. The Tour’s organizers need to show that, from time to time, they take strong measures (kicking a few riders out). All the teams try to out-smart the testers, for as long as they can. The public tries to convince itself that it’s all clean.
And, from time to time, you have a Lance Armstrong case. Tests get tighter for a while because there is more public scrutiny. That’s what’s happening right now after the fires in Bangladesh and Pakistan.