Tag: fair trade

Labor abuses in Chinese factories

Today’s New York Times has an important article about the conditions of workers in many of the factories in China devoted to manufacturing goods for export to the United States and other countries (In Chinese Factories, 1/5/08). The reportage is eye-opening but not surprising. Times reporters have documented excessive hours of work, pay that is lower than what Chinese law requires, working conditions that are chronically unsafe, and persistent exposure to the very dangerous chemicals that American toy consumers have been so concerned about. One of the authorities quoted in the article is Professor Anita Chan from the Australian National University, and Professor Chan has been documenting these conditions for years. Her book, China’s Workers Under Assault: The Exploitation of Labor in a Globalizing Economy (Asia and the Pacific), is a detailed and factual examination of some of these conditions. She documents the fact that the most vulnerable groups of workers — in the range of tens of millions! — are the internal migrants of China, who have left their home regions in search of jobs. Very significantly, Professor Chan bases some of her fact-finding on the slowly emerging field of local investigative journalism in China.

Why do these abuses occur? For several related reasons. First, the motive of generating profits in the context of a rapidly growing economy. Since China’s industrial economy was reformed in the 1990s, permiting private ownership of factories and enterprises, there have been strong incentives to be successful in business and to become rich. There is tremendous demand for low-cost Chinese-manufactured goods, and great fortunes are being made in consumer electronics, toys, clothing, and dozens of other sectors. But the profit motive leads factory owners and managers to strive hard to keep wages and factory expenses as low as possible; and the vast population of poor rural people in China who are available for unskilled factory work makes the bargaining position of the factory owner very strong. (Chan documents some of the forms of coercion and intimidation that are used in some Chinese factories to keep workers on the job and to prevent them from leaving or resisting.) And, as the Times story points out, the American purchasers are insistent about cost-cutting and price-cutting on the finished goods. So the result is — a chronic competitive “race to the bottom” in which each factory tries to produce at the require level of quality with the absolutely lowest level of cost; and this means continuous pressure on working conditions, health and safety conditions, and environmental effects.

So part of the story has to do with the economic incentives and advantages that factory owners have relative to a large working population that has few alternatives. But this part of the story is familiar from other economies as they have developed through intensive industrialization. It has been learned elsewhere in the world that the imperatives of profitability by themselves almost mandate the abuse of labor; so government regulation and inspection are a necessary part of a manufacturing system if it is to succeed in treating all the population fairly and humanely. We might have imagined that the Chinese government would have been prepared to provide the regulatory environment that was necessary to protect the best interests of farmers and workers; it is, after all, governed by the party of farmers and workers. However, this is not the case. China has been so concerned to support economic growth that it has been very slow to implement effective regulatory systems to protect labor and the environment. Moreover, the balance of power between factory owners and local officials seems to be tilted towards the owners; other Times reporting has documented the fact that local officials cannot impose their will upon the owners. And, of course, there is ample opportunity for corrupt collusion between owners and officials.

This failure to regulate has been evident in other areas besides labor; the Chinese government has shown itself to be unwilling or unable to enact effective environmental regulations or to establish an effective regime of inspection and regulation for foods, drugs, and other potentially harmful products. It appears that middle-class Chinese consumers themselves are now expressing anxiety about the absence of this kind of regulation within their food and drug system.

So what other avenues exist for improving the conditions of workers in China?

There are three possibilities — all mutually compatible. First, workers themselves can protect their interests in fair wages, safe working conditions, and limited hours of work — if they are permitted to organize in unions. Woody Guthrie had it right: as individuals, workers are weak, but together they are strong. It seems inescapable that a major part of the problem is the enormous imbalance that exists between the powers associated with ownership and management, and those assigned to workers and their organizations. So a more just China will need to permit the development of real independent labor unions that work hard for the interests of their members.

Second, labor mobility can improve the conditions of labor everywhere. It is not an accident that some of the worst abuses documented by Professor Chan have to do with the forms of coercion that factory owners use to keep workers in their factories. If workers can vote with their feet, then we would expect that they will migrate to factories and other employers who offer better conditions of work and pay. And this will force employers to bid for qualified labor on the basis of improved working conditions.

And finally, there is obviously a role for consumers and companies in North America and Europe in all of this. North American consumers benefit from the low manufacturing costs currently available in China; but these low costs are unavoidably associated with the labor abuses we see today. We have a model for how international companies can take responsibility for the conditions of labor and environmental behavior, in the form of the Fair Labor struggles of the 1990s on university campuses in the United States. Large apparel manufacturers took on the responsibility of subjecting their suppliers to standards of conduct, and they subscribed to third-party organizations that undertook to “audit” the level of compliance with these standards by the supply chain. (Visit the Fair Labor website for an example of such an organization.) As the Times story observes, this is a tricky business, given the substantial degree of sub-contracting that occurs in the manufacturing process in China. But it can have a measurable effect.

China is plainly destined to be a major economic and political power in the coming fifty years. But to succeed in creating a society in which everyone has a continuing stake in a good quality of life and a fair deal from society, it will have to solve the problems of regulation of labor, health, and environment. And this will mean a degree of redistribution of China’s wealth and power towards its poorest people.

The ethical consumer

As a rule, we know too little about the social and economic histories of the goods we consume. (Oddly enough, this is what Marx was referring to when he talked about the “fetishism of commodities”.) This is true of food — we consume coffee, tea, sugar, rice, or beef without thinking much about the conditions of human labor through which these goods were produced, or what fraction of the purchase price goes to the farmer or farm worker. And it is true of apparel and consumer goods such as toys or electronic gizmos — we don’t think too much about the factory conditions in which the products are made. We are distantly aware of “sweat shops” — but we don’t take the time to collect much information about what this means. And we certainly don’t know very much about the value stream through which the product passes, and the revenues generated for various parties along the way.

This is about the congealed history of the product. But we also don’t pay much attention to the future of the product — the consequences it will have after use. The social cost of recycling the AA batteries we use and the computer monitors; the ozone-depleting effects of the refrigeration we depend upon; the climate effects of the energy we consume — these all have major consequences that we recognize upon reflection. But we don’t look at the product and “see” the long-term consequences it represents, and we too rarely make consumption choices based upon those consequences.

And yet both features of a product need to be noticed and measured. How much exploitation and misery of distant farmers is congealed in the pound of coffee or the scoop of rice? Which seed and grain corporations have received what percentage of the total value of the finished product? Is the division of the final price among the producers and conveyers “fair”? Are we creating too much of an environmental deficit for the future by continuing to charge up all our cell phones and mp3 players? And how could we measure and compare products on the basis of criteria like these?

There is data to suggest that consumers in Europe and North America would differentiate among the products they purchase based on the “fairness” content and the “sustainability” content of the product — if this information were readily available. For example, a Eurobarometer study in the 1990s found that European consumers would pay a premium for fruits and vegetables labeled “fair trade”. (The amount they would pay varied significantly across countries, however!) (Visit the Eurobarometer website for a wide range of public opinion research on Europeans.)

We might imagine — literally imagine — a marketplace in which the social costs of a product are a part of what we examine when we consider a purchase. Like the list of ingredients on the can of soup, we might imagine each product labeled with basic information about its production history, the composition of the value stream, and the environmental costs of resource depletion and recycling that the product represents. And we might speculate that consumers would actually behave differently in the face of this kind of information.

This is the scenario that the Fair Trade movement in food is trying to create: a situation where consumers know more about the labor components of their choices and have some assurance that the primary producers and growers are receiving a fair share. And to judge from the visible successes of this movement in many places, consumers are willing to adjust their choices to bring about greater fairness.

So one wonders — what’s the next step? Is it possible that the resources of the internet might be a new way of leveraging consumer behavior in the direction of greater fairness and sustainability? Could we imagine a data service that allows the consumer to search for the product and see at a glance the “social accounting” that it represents? The possibility is tantalizing because of the exploding set of resources and tools that we possess to get a handle on the world’s data. And would this have the effect of further shaping our world in the direction of greater justice?