Helping companies fight sweatshops

On a 15-hour flight from Chicago to Hong Kong (in coach), it helps to have some distractions. The movie Get Smart? Nah. Instead, I spent time talking with Dan Viederman, the leader of an NGO called Verite, who I’ve gotten to know in recent years because he works with U.S. companies that want to improve conditions in factories in poor countries where their products are made.

Dan, who is 45, happens to be an old China hand. He first traveled to China in 1985, after college, to spend a couple of years teaching English. “I was one of 50 foreigners in a city of 9 million people and 30 of them were Korean,” he tells me. He also lived in China during the 1990s, first as a development worker with Catholic Relief Services and then as the director of World Wildlife Fund’s offices in Beijing. He’s been back many times since.

We ran into each other by chance, but we were both headed for the Pearl River Delta area of southern China, the world’s biggest manufacturing hub, where many millions of mostly young workers make the clothes, shoes, furniture and electronics we use every day. (I’m typing this blogpost on a MacBook Air; odds are some or all of it was made here. Same with the Gap jeans and shirt I’m wearing.) These huge facilities—with dormitories for the production workers, apartments or homes for middle managers, cafeterias and restaurants, stores and athletic facilities—are more like company towns than mere workplaces.

Consider: Shenzhen, which is just north of Hong Kong, was a fishing town of about 30,000 people when “paramount leader Deng Xiao-ping” (as he’s called in this morning’s South China Morning Post) designated the area as a “Special Economic Zone” to promote foreign trade in 1980. Today, Shenzhen is bigger than New York or Paris, with about 14 million people, and it’s one of China’s wealthiest cities.

This has been a boon to U.S. companies and consumers. But it has also led to scandals around sweatshop labor that embarrassed Nike and Kathie Lee Gifford and Disney and Wal-Mart, most in the 1990s, some more recent. Since then, U.S. companies have been looking for ways to stay out of that particular spotlight. Many have written labor standards and codes of conduct that they impose on their suppliers, after which they hire inspectors to monitor factory conditions. These U.S. and European brands function, informally and imperfectly, as the Department of Labor in China, which has pretty good labor laws on the books but enforces them erratically at best.

As executive director of Verite since 2004, Dan has tried to improve that system. He has worked with a host of companies – Timberland, Disney, Gap, Apple, a coalition of firms called the Electronics Industry Citizenship Coalition and others—around labor practices in the developing world. Verite does auditing, training, worker empowerment programs, research and investigations. Verite also has contracts with the U.S. government (labor and state) to look at issues like migrant labor and slave labor, and it’s part of a chocolate industry effort to do something about child labor in the cocoa industry in West Africa. The NGO is headquartered in Amherst, MA, with offices in China and Manila.

No one who knows anything about this system of factory monitoring, inspection and compliance will tell you that it is ideal but in China, at least, it’s about all we’ve got. Dan’s job is to make it better, and he says the obstacles are many—suppliers keep two sets of books to fool auditors, they monkey around with workers’ pay stubs by deducting funds for housing or uniforms, they track hours poorly or don’t pay overtime, etc. “There’s built-in underpayment of wages,” Dan says. Besides that, some auditors who work for U.S. brands may not be fully committed to the task—they are paid, after all, by the companies, and they may not know or care how to do inspections right. Think of how Arthur Anderson “audited” Enron.

As a nonprofit, Verite’s loyalty is to the workers, and its credibility is key. That’s one reason why Dan is refreshingly honest about the flaws of the system. “We don’t really believe you can certify a factory as complaint,” he says, because conditions change all the time as new orders come in. A more sustainable approach would be to educate workers to look out for their own rights—Timberland hired Verite to try that at some factories a few years ago, and Reebok has taken similar steps. But the Chinese government permits only one trade union, and Dan tells me that the government-controlled All China Federation of Trade Unions has never, as far as he can recall, organized a strike or fought hard for its members.

Despite all the problems, there’s little doubt that the massive industrialization of China has been good for its people. Hundreds of millions have lifted themselves out of poverty through factory work—more than in any other place at any other time. This is the upside of globalization.

“By almost any measure, except maybe environmental quality, China’s a better country for most people than it was in 1985,” Dan says. “I think that has a lot to do with its openness to the world and its role in the global economy.”

What’s more, before we smugly assume a position of moral superiority when it comes to cheap labor in China, we should remembering that it wasn’t all that long ago that rapid industrialization and unfettered capitalism created terrible factory conditions in American cities. (The Triangle Shirtwaist factory fire caused the death of 146 garment workers in 1911.) It took a robust union movement, aided by progressive politicians, to protect American workers from exploitation.

Something similar will have to happen in China before we can feel entirely comfortable when we pay “bargain” prices for laptops or jeans. Interestingly, the Chinese government has been more willing to allow dissent and permit the growth of vibrant NGOs in the environmental arena—where the problems are dire—than it has been to promote independent labor unions.

“In the long run, things will change because the society demands change,” Dan says. “This can’t be the responsibility of business alone.”