made in eastern europe - clean clothes campaign

Made in... Eastern Europe

The new ‘fashion colonies’

Bettina Musiolek and others report on appalling working conditions in the garment industry

The publication was made possible with funding from

and

Stiftung Menschenwürde und Arbeitswelt

This PDF-publication - © Berlin 2004 - is the updated translation of the German brochure: "Made in… Osteuropa", © Berlin 2002 - a publication by TERRE DES FEMMES, E.V. Tübingen.All rights are reserved to the author

Author, editor, and coordinator, translation, photos: Dr. Bettina Musiolek Graphics, layout, and editing: Susa Olschewski - media and exhibition designEnglish editing: Bart Plantenga

© photos: pages 30 and 35: Clean Clothes Campaign; pages 36 (top) and 37:German Clean Clothes Campaign

Made in … Eastern EuropeBettina Musiolek and others

We have recently witnessed the emergence of "fashion colonies" and, make no mista-ke about it, they are booming. There's only one problem with this scenario: There hap-pens to be lots of women toiling away in the name of fashion, which is not unlike whatis happening in many Asian, Central American, and African countries.

Although this booming garment industry raises the hopes of many people, the seam-stresses, the actual workers are left out in the cold while fashion multinationals turna handsome profit.

The radical changes caused by the processes of globalisation, transition and EU tradepolicies just further exacerbates the power imbalance and increases the gap betweenrich and poor along the entire garment supply chain.

Let's put a stop to this way of doing business immediately! The time is now to createa resistance movement to counteract these global forces!

Read this and then ask the Clean Clothes Campaign (CCC) for further instructions!

1. Nothing New in the East Toiling for Fashion - Like in Asia or Central America

2. The Pillars of Fashion Production

3. Global Supply Chain Patterns and Their Eastern European Variants

4. Facts About the Garment Trade

5. The EU, the Outward Processing Trade and the Exploitation of Labour

6. Apparel Importation Changes in the EU - by Gary Gereffi

7. Maria, a Brave Trade Union Activist; Roska's Cooperative - by Monika Balzer

8. Factory Profiles from Belarus, Romania, Bulgaria and Poland

9. Once Upon a Time Adidas produced at Savinia in Bulgaria

10. New initiatives for Social Standards in Romania - by Mariana Petcu

11. Making the Hidden Visible - by BEPA, Bulgaria

12. Escaping the Vicious Circle

13. Brief Introduction to the Clean Clothes Campaign (CCC)

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Made in Eastern Europe - 2

Are appalling working conditions in the garment indu-stry now also becoming the norm in Eastern Europe1?In global terms, this situation unfortunately is nothingnew. And yet, for the people of the region it remains anew phenomenon. The United National DevelopmentProgram in its regional report calls it "the most acutepoverty and welfare reversal in the world" (UNDP1999). For its 1999 International Labour Conference,the General Director of the ILO (International LabourOrganisation) noted a dramatic level of social disinte-gration and an explosion of poverty in the region.

During the last 12 or 13 years, the region has under-gone historically unprecedented levels of social changeand social backlash, which has led to a deep sense offrustration and insecurity among the region's people.One aspect of these changes unfortunately is the proli-feration of inhumane working conditions in the gar-ment production sector. Just as in many countries inCentral America, Africa, and Asia, where sweatshopconditions are more likely to be suspect, Eastern Euro-pe has witnessed an explosion of these types of condi-tions in its workplaces - in fact, conditions only seem tobe getting worse.

The garment sector in Eastern Europe is not just someperipheral and inconsequential part of the economy.Quite the contrary, it is at the heart of many of theregion's economies (see also trade facts in Chapter 4).Fashion is one of the region's major ex-ports and forsome of the region's countries, one of the only remai-ning dynamic industries along with food processing,wood and furniture production and some mining indu-stries. In Bulgaria for example, 2002 garment exportssurpassed energy as the leading export items.

This state of affairs reveals one of the great paradoxesof apparel production in Eastern Europe (and Turkey):while the general economic picture for many of thesecountries has turned very grim, the garment industryby contrast seems to be booming in a number of theseplaces. This situation is certainly used to full advanta-ge by the local garment sector employers and theirinternational clients.

And why should we be concerned about EasternEurope's seamstresses?

Well, because about 70 to 80% of all the apparelproduced in Eastern Europe are shipped to the EUand nearly half of all the apparel produced in EasternEurope is exported to Germany2. The combined gar-ment imports from Eastern Europe and Turkey alonecomprise a third of Germany's total garment imports- equalling the total from all of Asia.3 When it comesto garments, Germany is the EU's most import-inten-sive nation overall and for Eastern European imports.

Mail order and brand name companies, discount andoff-price stores, mass merchandisers and specialtystores such as Adidas, Nike, Puma, Kappa, Betty Bar-clay, Hugo Boss, Strellson, H & M, 3Suisse, Replay &Sons, Sara Lee, C & A, Triangle, Adler, KarstadtQuel-le, Benetton, Steilmann, Gerry Weber, Bernd Bergeramong many others all source from Eastern Europe.

West German garment producers began relocatingparts of their manufacturing operations as early asin the 1970s, to places like the former Yugoslavia,other East European countries and the former DDRor East Germany. These companies developed astrong political lobby and gained favourable conditi-ons by lobbying for a foreign trade policy beneficialto their industry, which encouraged relocation andthe foreign sourcing of ready-made garments. In the 90s, pre-existing business contacts expandedrapidly. Other "garment nations" like Italy, theNetherlands, and Switzerland increased their owngarment production outsourcing. The civil war in theformer Yugoslavia forced many fashion manufactu-rers to relocate to places like Romania, Bulgaria, andother Eastern European countries. By the end of the90s, much of the garment production was shiftingaway from Hungary to Romania and Bulgaria.

1. Nothing New in the East - toiling for Fashion - like in Asia or Central America

1 The author is aware that the geographical term "East" and"West" are biased terms and historically have a negative con-notation particularly in Europe's German-speaking region. Inthis brochure, "Eastern Europe" means the central, southernand eastern Europe region consisting of the former state-socia-

list countries and the former Yugoslavia.2 Then is either sold there or traded onward (i.e., the fact thatgarments are imported into Germany does not necessarilymean they are sold solely to German consumers)3TextilWirtschaft no. 18, 2 May 2002, p 75.

Recently these relocation movements (and threats)involve the further transfer of factories to areas likethe Ukraine, Russia, and Albania. Saxonian (sou-theastern Germany) ready-made garment manufac-turers mostly outsourced their production to theCzech republic; Czech manufacturers in turn subcon-tracted the orders to Ukrainian firms. At the sametime big Turkish and Greek manufacturers beganestablishing their own or subcontracted productionfacilities in Romania, Macedonia, Albania, and Bul-garia. A Romanian NGO-activist described it this way:

Labour law not implemented and safeguarded

In an industry that has distinguished itself as one ofthe more successful industries in Eastern Europe,the big discrepancy between current existing labourregulation and the reality of the workplace is stri-

king. Generally, the ILO core conventions have beenratified in all of the region's countries. Althoughgovernments often "adjust" the labour laws to thedemands of the EU and the international financialinstitutions (e.g., International Monetary Fund),labour legislation remains comparatively far-rea-ching because of the legacy of the state-socialist eraprior to 1989.

This is not to say that countries like Germany don'thave their own share of discrepancies between the lawand reality. But in Eastern Europe, social security andthe rights of workers are seldom respected to anydegree. There are countless examples of breeches ofthe law. For example, there are laws that protectmothers like the one that requires employers to offer 2years of paid maternity leave in some eastern Europe-an countries. This law is, needless to say, circumventedby employers who do everything within their power toavoid hiring young mothers. Employees are often firedjust before they retire so that employers do not have topay for their severance packages. These same workersmay even get rehired as "new" employees. In Poland,Ukrainian seamstresses are hired as cheap labourwithout any employee rights. The trends toward hiringemployees on a fixed-term basis; and the replacementof permanent employees with contract and hiredlabour is becoming increasingly widespread becausethe laws mostly only protect permanent employeeswith labour contracts. In some Eastern European coun-tries, the state labour inspection officers are deniedlegal access to the very companies they are supposedto be inspecting except when they are accompanied bythe police.

Circumventing the law has become so commonplacethat it has inspired some truly bizarre justifications:Foreign buyers have stated quite openly that they can-not agree to pay their legal social contributions andtaxes to "these corrupt governments", which means aquite fairly elected democratic government.

State labour inspectors get a particularly good sense ofthe economic pressures placed upon garment industryworking conditions. When a company is doing well


Eastern Europe's "Competitive Edge"

Geographic and cultural proximity to the "West",which means shorter delivery times and relative-ly easier communication with trade partners.

Already available production capacities, a quali-fied labour force and a developed infrastructure.

Drastic devaluation of the region's national cur-rencies especially during the early 90s boostedthe region's attractiveness in terms of tradeespecially for those paying in Euros or US dollars.

EU-trade legislation regarding Eastern Europe(EU-Association-Agreements): Most countries arenot subject to MFA-quotas and enjoy tariffexemptions for their garment exports to the pre-sent EU states which are made under the Out-ward Processing Trade Scheme.

The low level of respect for, and the generally ina-dequate implementation of, national labour lawsas well as a comparatively uncritical citizenryconcerning these issues. And in the name oftransformation, EU accession and globalisation,the rise of workplace problems, especially thoserelated to women remain widely ignored.

In one word: The opportunity to create cheap andappalling workplace conditions makes the regionattractive for garment manufacturing orders.

"Investors come to Romania to exploit the people and tofinance Western wealth with Romania's cheap wages."

(anonymous German investor)

"We are Europe's backyards".

financially and begins exporting its products, no labourinspector would seriously consider imposing a fine -even if existing laws are seriously being violated. Infact, there have been numerous incidents, some ofwhich were reported in the media, involving labour ins-pectors and their families being personally threatened.Furthermore, the labour inspection department is dra-matically understaffed especially considering theirdaunting task.

Naturally, poignant labour legislation has its outspokenopponents: by using lobbying tactics and public pressu-re, and applying direct influence upon the legislativesystem, employers and international buyers attempt toscuttle and alter existing laws in their favour. In Bulga-ria, for example, employers tried to get all garmentindustry employment classified as seasonal labour,where most social security, benefits, and labour rightswould cease to apply. Laws that regulate the number ofhours in a work week and overtime hours do not applyto seasonal workers - all details that are of particularinterest to garment producers. In another case, popularsportswear brands presented their arguments againstthe 40-hour work week limit in Bulgaria.

The exception in this scenario: legal minimum wage

In this predominantly frustrating atmosphere wheresupposedly far-reaching labour laws are basicallyignored at most workplaces, there is one remarkableexception: the legal minimum wage in each of theEastern European countries. This provision was basi-cally added to the countries' labour laws only after theupheavals of 1989-1990 and thus they have the sup-port of the major international financial institutions,whose influence during the transition period cannot beoverestimated.

The World Bank and the IMF do not lobby for legal mini-mum wage legislation that is connected to the actualcost of living. On top of that, laws do not customarilyprovide for legal minimum wage inflation compensati-on (indexation). Considering the reality of considerableconsumer price increases, legal minimum wages end

up not keeping up with the costs of living over time,sometimes even falling below the poverty or subsisten-ce level.

Any minimum wage adjustment takes place in politicalnegotiations. In Eastern Europe, where trade unionsare weak in the private sector, these negotiations as aresult of the one-sided economic perspective maintai-ned by international (and national) lobbyists usuallylead to minimum wage levels unfavourable to workers.In Poland, for example, it was common knowledge thatthe IMF and World Bank recommended the already-meagre minimum wage (approximately 200 permonth) be eliminated to break down the last "invest-ment hurdles".

It therefore comes as no surprise that minimum wageregulations are often the only legal provisions respec-ted by employers and foreign clients. Multinationalsand employers often place great emphasis on this par-ticular regulation, which ironically justify the extremelylow wages paid in their production facilities. A widespread practise throughout the region is foremployees to be paid the legal minimum wage 'offici-ally' with all earnings beyond that paid in cash - withtaxes and social security contributions being withheld.Any annual or sick leave is only paid at the legal mini-mum wage rate - in other words, without the under-the-table "extra" income. This usually means that seam-stresses cannot afford to and thus seldom go on leave.Entitlements for social services and pensions are the-refore meagre, with the nominal pensions falling farbelow the legal minimum wage, while social servicescontinue to be cut as a result of the infamous adjust-

Bulgaria's ex-Premier Kostow on his way to the IMF (Inter-national Monetary Fund) carousel. Source: Sega, 13 July 1999


ment measures. Therefore, employees have no trust inthe social system and readily agree to their employers'evasive wage practices. Seamstresses have actuallystopped making plans for the future because theirdaily survival takes up all their energy and resources.They commonly view their situations as unbearableand hopeless, particularly for their children.

This general state of affairs is certainly used to fulladvantage by the multinationals and foreign clients.They calculate their sourcing prices on the basis of thelegal minimum wage and circumventing the existinglaws, often claiming ignorance as their defence. Asmall Romanian supplier of winter coats, for instance,receives 3.50 € per piece for sewing this complex,high-quality item. How can fair wages, legal workinghours, and decent working conditions ever realisticallybe paid out of this price?

For fashion multinationals anything goes when itcomes to cutting costs: they buy companies and closethem as they please, cancel orders arbitrarily, treatemployees disrespectfully, and ignore existing environ-mental laws without having to fear any repercussions,while workers face consequences for any 'misbeha-viours'.

Where is the critical public?

A genuine critical public that insists on state measu-res protecting employees and the implementation ofmonitoring practices of companies has only recentlybegun to emerge. The general absence could beespecially felt in the context of the transition pressu-

res as each country moves toward a mar-ket economy, and is further affected byglobalisation and EU accession. Theycan easily justify drastic cuts in socialservices - especially in light of the recentNATO military rearmament "obligati-ons". The media and politicians conti-nue to promise that saviours in theguise of more investors will arrive en

masse after they join the EU and NATO. These inve-stors will magically eliminate the high levels ofunemployment and the economic depression. Mean-while, the vicious circles of global and regional com-petition continue to tighten the noose. "The highlevels of unemployment basically undermine all ofour efforts" observes a Bulgarian trade unionist. Incountries where unemployment in real terms is over20% - in some areas over 50% - the employees' bar-gaining position remains feeble. The neo-liberal fan-tasy of an unregulated economy and a market thatrenders the "human capital" totally submissive tothe "market" demands has already become realityhere in Eastern Europe. There's only one flaw in thisfantasy - the fact that the economies still remaindevastated. Workers have willingly adjusted toemployer demands and "market" factors even astheir lives grown increasingly desperate and lesssecure. The populace is fully aware of this dilemma,which in turn only leads to a sense of hopelessnesswhen it comes to alternatives.

Under these sorts of circumstances and in a situati-on of general lack of a tradition of civil rights as it isneeded for capitalist societies, a civil society canevolve only very gradually. Another factor of somerelevance involves the notion among many of theregion's people that they have to solve their own pro-blems locally, without any outside assistance. This

"It would be fine with us to pay more to the workersas long as it applies to all our competitors as well.For example if governments raise the legal minimum wages."(Ingrid Schullström, H&M)


"When West European investors come here,they think this is Alaska: Anything goes,

there are no rules and everything free of charge".

(Bulgarian woman manager)

attitude does not facilitate a situation that leads tocritical monitoring of multinationals. Given the imba-lance of influence and power along global supplychains4, there seems to be very few solutions, if any,that could be successfully tackled solely on a locallevel.

Even in more positive economic situations whereunemployment figures are under 10%, wages andworking conditions are not showing significantimprovements. Comparative investigations bearthese findings out in various areas in both Romaniaand Bulgaria - two countries witnessing a boom ingarment production. This seems to imply that thereis a lack of forceful public criticism and a lack ofstrong organised labour representation and is cha-racterised by a situation where creating jobs isalways more important than better working conditi-ons - the typical trade-off of jobs over rights thatusually leads to a social and economic vicious circleand downward spiral.That is why seamstresses in all of the countriesbeing investigated always deny that there is forcedor bonded labour in their workplace, but they expressprecisely this economic situation that creates astructural force - a structural violence - which com-pels workers to accept their worsening working con-ditions. However, critical voices are emerging that have begunmonitoring the practices of multinationals. Forinstance, Danone's exploitative and reckless practicesin Hungary or those by French and German retailchains like Carrefour and Metro in Poland and othercountries has led to public discussion and campaigns.It is increasingly apparent that the demands andclaims of investors so often received with open armsshould not always be blindly accepted by the host nati-ons (see articles by BEPA and Mariana Petcu).

"My job is good, at least I receive pay checks on time."

These kinds of low-level criteria for evaluating jobquality attest to the general conditions in the facto-ries that lead to such low expectations, where thebasic criteria is whether an employer is at all payinghis or her workers. Systematic violations of any other

labour rights are subsequently pushed ever furtherinto the background. And yet, issues of private pro-perty and the market economy seem to be incontro-vertibly connected to tax evasion and ignorance oflabour laws. The most common violations of basic labour rights inthe garment industry in Eastern Europe are not unli-ke those in other regions and include: 1. consistently required to work excessive hours2. low pay3. obstructing the right to organise and collective

bargaining. (See chapter 8 and the end of this brochure for morecomplete list of basic labour standards.)

The pressure to work excessive and underpaid over-time, plus meagre wages and the absence of wor-kers' representation are characteristic for pre-fordistcapitalist labour relations. There are also reportsthat include severe sexual harassment, arbitrarypunishments, ethnic discrimination, and child labour- although these incidents do not occur regularly,they can be classified as systematic. Health pro-blems are also frequently reported.

Fashion multinationals commonly have themselves'subsidised' by women's labour.

Pay rates in the garment sector can only be descri-bed as starvation wages. The female labour force issystematically underpaid - and classified as qualifiedby virtue of the fact that they are women and women"naturally" have the necessary "nimble fingers" andthus never fully reimbursed for these skills. Theiraverage monthly pay check ranges from approxima-tely 80 - 150 in Romania and Bulgaria relegatingthem to a bare subsistence lifestyle and thus fami-lies are forced to supplement their incomes throughsmall subsistence agriculture for their own con-sumption and other income-generating activities.Entire areas in these countries are impoverished and- ironically enough - survive in part because they areable to fall back on the benefits they took advantageof during the state socialism era. For example, manywere able to acquire their own flats prior to 1989and so now have one less cost to worry about.

Low remuneration stimulates conditions for produc-tion flexibility, i.e., allowing employers to demand


In a quota and piece rate system, seamstresses suffer fromhigh levels of stress caused by the time pressures of piece-work. (Cartoon-idea: CCC-Belgium-Flemish speaking)

overtime at any time, because workers are made tofeel "grateful" for the chance to earn some extraincome by working overtime. Because remunerationis commonly based on a piece rate, overtime is oftennecessary just to meet the high quotas. That meansthat the overtime they work is not officially categori-sed as overtime and therefore not paid at a higherovertime wage rate.

The garment industry is commonly considered to beamong the worst paid sectors world-wide. In Roma-nia for instance, only forest workers and wood cut-ters earn less than seamstresses. Trade union organisations and collective bargainingonly exist in those formerly state owned factoriesthat are left over after privatisation and deindustria-lization following the "shocktransformation"5 Hereone can still find active trade unions. They providefor relatively regulated working hours; but the wagesare sometimes even lower than those in small priva-te firms because overtime is regulated creating avicious circle. This again points to the pre-fordistinterrelationship between wages and working hoursstill prevalent in the garment industry. Workers arealways in need of earning a decent monthly wageeven although it means working excessive hours. In companies where employees are still representedby unions, it has become more and more difficult fortrade unions to operate normally due to employers'intimidation. Many new owners of formerly state-owned companies simply ignored existing collectivebargaining agreements and demanded, and someti-mes even succeeded - that trade unions be drivenout of their factories. The ICFTU (International Con-gress of Free Trade Unions) frequently reports on theviolations of the right to organise and collective bar-gaining in this region. Fashion multinationals continue to succeed in play-ing the weakest actors of globalisation, those seam-stresses at the bottom of the global supply chain,against each other.

The "Wild Wild East"

The privatisation process in the garment sector in thisregion, with a few exceptions, is almost complete.Many of the formerly large textile trusts have beenunable to survive or survive as small sewing shops. Theoverwhelming majority of companies in the sector arenew, private, micro-enterprises.

A comparison of various Eastern European garmentproducers points out the discrepancy between former-ly state-owned companies and new private enterprises.The work situation varies widely in these new privateshops, but workers are commonly deprived of theirbasic labour rights. The formerly state-owned trusts, ifthey even exist, have become the focus of labour ins-pectors who have a much harder time getting inside toinspect the newer private companies. In Serbia and Montenegro, in Bosnia and Herzegovinaand in Moldavia, there are periodic reports, attesting tothe extreme poverty of the people after the variouseconomic recessions and civil wars and how these fac-tors are being used to exploit the workers. For these reasons, researchers in the region repeated-ly note that the garment industry is a core sector thatis characterised by the informalisation of work wherebasic rights and legal protection no longer apply. Workarrangements are destabilised and 'flexibilised' andwhat used to be formal work has become free of allconstraining regulations because these new privatefirms simply ignore existing labour laws from the verybeginning which has led to the emergence of smallsewing sweatshops that have arisen outside the regu-lated structures in backyards and private flats.

Gender-specific discrimination - a taboo

Are women discriminated against in the Eastern Euro-pean garment industry? The answer is often "no". Thereasons offered include that women don't earn lowerwages than men performing the same job and thatseamstresses are badly paid all over the world.

The first reason remains difficult to prove becausethere are so very few male seamstresses. But what canbe safely stated is (see factory profiles):

1. The wages, working hours, and conditions in the gar-ment industry are among the worst of any sector


"Italians come to Romania precisely because there are no trade unions in this country. The conditionsare very good for us, especially thoseconcerning employment relationships, for instance.I mean, you know, employers want to be able to dismiss workers as the need arises."(an Italian manager)

5 For the early 90s, the term "shock therapy" as instituted byvarious international financial institutions is frequently used inthe literature. It means that problems occurring during the

transition process, can only be cured by speeding up marketeconomy reforms.

despite the high skill demands and the intensity ofthe work;

2. The wages of male employees in the sector, whosupposedly do the "heavy" work of, for instance, cut-ter or packer, but are not under quota pressure andhave generally lower qualifications, often earn morethan seamstresses;

3. Sexual harassment and sexism remain difficult toreport because of the perceived lack of actual haras-sment;

4. High levels of age discrimination when recruitingwomen over 35 years of age and women with child-ren.

These facts clearly indicate a situation of structuraldiscrimination based on gender and age. The availabi-lity of qualified females who are systematically under-paid has become a crucial pillar of the fashion indu-stry. Female labour remains cheap because of theperceived natural abilities and skills of women whichare not compensated for with higher wages. These so-called innate skills are actually skills learned overtime. Besides that, a woman's income is still perceivedas a family's supplementary income while the percep-tion remains that the man is still the breadwinner. Alt-hough the global reality sharply contradicts this per-ception of women as supplementary earners.Estimates by trade unionists in the Eastern Europeancountries investigated, highlight the fact that in 50 -60% of garment workers are female family breadwin-ners or single mothers. Seamstresses are highly de-pendent on their wages for their survival, even thoughit remains low.

Trade unions have long misunderstood or ignoredthese details and thus have never focused on develo-ping concrete strategies oriented toward a predomi-nantly female workforce. This neglect of the "women'ssectors" is unfortunately a reality in Eastern Europeantrade unions as well.6

Another factor influences the lack of concern for fema-le workers: the mistaken notion that to focus on gen-der relations is a disrespectful throwback to "commu-nist times". And no one wants to be accused ofpromoting outdated ideas? After the changes in 1989-1990 there was a renaissance of conservative familyvalues and traditional gender roles. Women were toreturn to their role as "queens of the household" and

"mothers of the nation"7. These tendencies were nosmall factor contributing to the silence concerning theappalling working conditions of women in particular.

Conclusion

The garment industry is strategically important for theEastern European countries in terms of production,exports, and employment opportunities. At the sametime, the region is a crucial supplier for the EU market.The Euro-Mediterranean zone is a region with vertical-ly integrated textile production chains and long-stan-ding traditions in textile and garment economies inclu-ding related financial, textile, and economic services. Itis emerging as one of the world's main textile/garmentregions. The present major garment producers inclu-ding Romania, Poland, Bulgaria, and Hungary stand toplay a major role in this zone along with Turkey.

However, this strategic position and its potential thusfar has not filtered down to benefiting the workers andtheir labour rights situation - in fact, it has been quitethe contrary. It is not unlike the situation in other regi-ons of the world - basically, the fashion multinationalsare the ones who profit.

Ironically, a booming garment industry in Eastern Euro-pean countries has meant a series of economicallyfatal structures: suppliers' and subcontractors' produc-tion systems are highly dependent, highly vulnerableand highly one-sided (especially in the aftermath of theOutward Processing Trade). And on top a downwardspiral in labour and living conditions. These processes,usually associated with globalisation, in this region areinterwoven with the transition processes and theiraccession to the EU. "


"It is hard to believe for outsiders that seamstresses con-cede that they have to work ever harder to earn ever less."

(Polish trade unionist)

CEE", February 2001, FairPlay: The Gender and DevelopmentMagazine of the KARAT Coalition, 7/2002, p. 7; Stasa Zajoviae6/2002.

6 See Jasna A. Petrovic (2001): "The Male Face of Trade Unionsin Central and Eastern Europe (The Secret of InvisibleWomen)", Report ICFTU/FNV Gender Project and Sonja Lokar"Promotion of Gender Specific Policy within Trade Unions in


2. The Pillars of Fashion Production

One of the first highly globalised sector with lousy working conditions: The trade-off between jobs and rights

Global availability ofcheap, quali-fied femaleworkforce

Currencydisparities

cause favou-rable termsof trade forbuyers fromthe 'West'

Unemployment

Competition betweenlocal and national

governments createshighly favourable con-ditions for 'Western'investors/buyers at

the expense of labour standards

High mobilityof capital and

low capitalintensity


3. Global Supply Chain Patterns and Their Eastern European Variants

Actua l producers : subcont ractor s

Buy ing agents

Manufacturer s

Garment and sportswear retailers and mail-order companies

I n f o r m a l w o r k( S w e a t s h o p s , h o m e b a s e d w o r k )


Tens of thousands of production shops in East Europe produce garments for various buyers (agents, manufacturers, brand-name companies...)

Buying agents in Hungary, Romania, Turkey …

Steilmann, Gerry Weber... Fanko, Tricolan (based in Germany) (based in Greece)

ex. Adidas-Salomon, NIKE, Benetton, Marks&Spencer

I n f o r m a l w o r k


Germany is the EU's most import-intensive countrywhen it comes to garments and it is the largest buyerof garments from Eastern Europe.

One quarter of Germany's garment imports are fromEastern Europe and this continues to increase, despitean overall slump in Germany's garment imports1.

One quarter of all garment imports into Germany areOPT (Outward Processing Trade) garments and thiscontinues to increase2.

80% of all German OPT imports originate in EasternEurope - in 1999 approximately 17% of these werefrom Poland and 18% Romania3.

OPT. Outward Processing Trade, assembly production,production sharing, cut-make-trim or cut-make produc-tion (CMT/CM) are interchangeable terms (s. chap. 5).Full package supply is similar to OEM (original equip-ment manufacturing) and specification contracting.

Fashion goods made under the OPT scheme are stra-tegically important for the German market - andEastern Europe is the principal location of OPT produc-tion facilities (see chapter 5).

Germany's five main garment suppliers 20024

(in billions of )China/Hong Kong 1.4Turkey 1.3Poland 1.0Romania 0.9Italy 0.8

EU's main garment suppliers 20015

(in billions of )China/Hong Kong 14.8Turkey 6.2Tunisia 3.0Romania 2.8India 2.8

4. Facts About the Garment Trade

1-3Sources: Corporate Solution: Bekleidung in Osteuropa, Mar-ket Guide 2001, Bad Nauheim 2001, p. 4-11; TextilWirtschaft:6.5.1999, Nr. 18, p. 74 +29.4.1999, Nr. 19, p. 74 + 2.5.2002,Nr. 18. p. 76

OTP made in Eastern Europe

Made in Eastern Europe

OPT

4, 5 Sources: TextilWirtschaft 2 May 2002, no. 18. p. 76; Marke-ting and Distribution of Garments in the EU, May 2002, HongKong Trade Development Council p. 56.

"Three quarters of all German manufacturers presentlyproduce goods in the former Eastern block". (German garment sector lobbyist)

Trends for the future

Eastern Europe has continued to increase its overallshare of the garment trade. Sourcing from within Euro-pe has continued to expand. Meanwhile, China will asforecast continue to emerge as an evermore importantglobal fashion supplier (WTO membership and pha-sing-out of Multi-Fibre-Agreement). This will, however,have only a limited impact on the intra-European gar-ment trade from East to West because of Eastern Euro-pe's main advantage, its proximity to EU markets. Deli-very times are ever shorter, allowing for increasednumbers of rotations of stocks and seasons, increasedorder size and reductions in fixed capital and just-in-time-deliveries. Plus with the expected increases in airtransport costs the region becomes an increasingly attractive production location. The region will in the

long run continue to be attractive because of its gene-ral high level of labour skills, its power and water infra-structure, and its political and legal adjustments to EUrules. Some of the region's countries will probablybecome prominent within the Euro-Mediterranean tex-tile & garment industry zone, which will include full-package production and some (re-)upgrading of theindustry. In the short term, the region's EU membership andcustoms exemptions for OPT re-imports will furtherfacilitate garment trade from Eastern to Western Euro-pe (of course, not without some resistance from EU-sector lobbies alleging unfair competition and the dan-gers of the elimination of tariffs).


*nal = not among the leading 4 export goodsNote: The value of Eastern European exports is undervalued because it consists mainly of OPT garments, whichstatistics don't fully account for or not count at all (at the border). Compared to Turkey e.g.: Turkey does not pro-duce much under OPT while the Eastern European countries export mainly OPT garments.The high and increasing rank of garment sector in terms of exports verifies the de-industrialisation in EasternEurope and the downgrading of their industrial structure particularly in the textile and garment economy. Gar-ments have continued to replace products with higher internal added values. In Bulgaria for example, garmentshave replace energy exports at the first rank in exports since 2002. Thus the foreign trade structure of many coun-tries in the region has been reversed to resemble those of 'developing' countries with few exceptions like that ofthe Czech Republic.

The garment sector is crucial to Eastern Europe's economies and export figures

6Sources: Gary Gereffi: "Outsourcing and Changing Patterns ofInternational Competitiveness in the Global Apparel Commo-dity Chain", paper delivered at the conference "Globalization

and Labour" at the New School, New York , 8 March 2002,table 3; Corporate Solution: Bekleidung in Osteuropa, Market

Rank of garments among the leading export goods of East European countries and Turkey6:

1980 1990 1998Turkey 6 1 1 26Poland 6 10 1 8 2Romania 3 4 1 24 1Hungary 8 9 4 12 4Czech Rep. 10 7 7 15 nal*Bulgaria 1Croatia 1Lithuania 1FYROM 1Moldava 1Slovakia 3Slovenia 3Ukraine 1Belarus 1

Rank of garments among overall exports to Germany in 1999

Share of garmentsin overall exportsin 1998

What is "Outward Processing Trade"?

Outward Processing Trade (OPT) or assembly produc-tion1 is a way of manufacturing and trading garmentswhereby the imported - mostly pre-cut - inputs areassembled and sewn and then re-exported to the inputcountry of origin. The main cost component of thisbusiness transaction are allegedly wages. This re-importation arrangement can only be profitable for thebuyer/input-supplier company in the country of origin,when the assembly costs (wages, rent, energy costs,etc.) are kept attractively low, the terms of trade arefavourable and the trade transactions are not subjectto customs or tariff expenditures. Some examplesinclude garments assembled-produced in Central Ame-rica and Caribbean countries destined for the NorthAmerican market and those in Eastern Europe desti-ned for West European buyers.

OPT, Germany, and the EU

Germany's OPT imports comprise a considerable share- some 25% - of its total garment imports; whereas thisshare is approximately 15% for the entire EU. Twothirds of all EU assembly production orders are placedby German buyers.German garment industry turnover distribution by pro-duction and sourcing location2:

OPT and Eastern Europe

OPT's share of Eastern Europe's garment exports toGermany is sometimes almost 100%; while in Polandand Romania the share is some 90% (1999/2000)!These two countries alone, account for some 35% of allGerman OPT imports. Among the 16 largest supplier-nations of assembled garments there are only threenon-Eastern-European countries: Tunisia, Morocco, andTurkey.

Germany's main OPT suppliers3: 2000 % change between

2000 - 1999(billions of )

Poland 0.8 - 5%Romania 0.7 +3% Tunisia 0.3 - 7%Czech Rep 0.25 +6%Hungary 0.2 -10%

OPT, the Textile and Garment Sector and National Eco-nomies

The main motivations for outsourcing and foreigninvestment in Eastern Europe also apply to OPT (seepage 3). There are three important factors: One, thepre-existence of intact industrial infrastructures; two, a


5. The EU, Outward Processing Trade, and the Exploitation of Labour

1 OPT-Outward Processing Trade, assembly production, produc-tion sharing, cut-make-trim or cut-make production (CMT/CM)are similar terms. In some of the region's countries, the termsLohnsystem (Lohn is German for wage) or Ishleme (originallyTurkish for embroidery) are used.

OPT external 47%

Additional sourcing 28%

Own internalproduction 10%

Own external production 12%

OPT internal 3%

2Source: "IG Metall: Entwicklung und Perspektiven: Textil- undBekleidungsindustrie in Deutschland", January 2002.3 Source: "Corporate Solution: Bekleidung in Osteuropa, Mar-ket Guide 2001", Bad Nauheim 2001, p. 10; own calculations

skilled and qualified workforce, submissive to thedemands of employers - the "this is market economy"argument; and third, the attractive exemptions fromquotas and tariffs, granted by the EU to Eastern Euro-pean countries since 1982 in the "Europe Agree-ments", a situation which facilitates the outsourcing ofassembly production and thus stimulates the buyers'increased flexibility, just-in-time delivery, and time eco-nomy strategies.

But these trade enhancement measures apply exclusi-vely to OPT-produced garments, and not others like fullpackage production where the production country'sown inputs are used. Textiles and full package gar-ments are subject to EU exports tariffs and customs.Textiles have even been declared "sensitive" goodsbecause their importation into the EU endanger theEU's technology-intensive textile industry. The EU can

furthermore impose "anti-dumping-measures" for cer-tain categories of textiles and clothing - to prevent alle-gedly unfair competition. On the other hand, however,the EU has pressured the Eastern European countriesinto opening up their textile and clothing markets4. Theidea behind this trade policy has been to relocate whatcannot be kept profitably operating inside the EU; inother words, protect their own R & D and technologyindustries and ensure the free access of EU products inother countries.

The immediate consequence of these kinds of tradepolicies is that the heretofore developed textile andgarment sector within COMECON/CMEA (the formerEastern European economic block) survives as nothingmore than a sewing shop for the EU. Over the past 13years, Eastern Europe's textile and garment sector hasbeen downgraded to providing nothing more thanassembly manufacturing3 - An upgrade would signify asituation whereby clothes, fibres, yarn, accessories anddesigns would all be produced and/or procured withinthe nation. This would stimulate the future businessand national economic prospects for the region.

Instead, the vertically integrated trusts lose their struc-ture and are eventually forced to adjust to the OPTdemands of buyers: they end up sewing and nothingmore as a matter of survival. Their skills and knowled-ge in the earlier textile production stages ( fibre, cloth,and yarn production, for instance); in fashion design,garment pattern-making and the development ofcollections by local designers; and in the financing ser-vices around production and marketing of garmentshave remained under-developed and eventually dwind-le away. When a sector is reduced to primarily garmentassembly, the profit margin is low compared to fullpackage production and so these sewing shops workfrom "hand to mouth".

Despite expanding trade, the EU trade policies towardEastern Europe include a low level of involvementamong Western European buyers. If OPT is easilyaccessible for Western buyers, why should they makethe effort to invest directly. Hence, the buyer-supplierrelationship is rather parasitic. The assembly shop that relies on OPT becomes extre-

mely vulnerable, fragile, and dependent from thebuyer. The dramatic market fluctuations bear witnessto this; for instance, Hungary has experienced a down-turn of some 10 %, while some countries like Slovakiahave experienced deviations of up to 23%. Assemblyproduction is characterised by its high level of depen-dence on buyers, those companies that place OPTorders. Decisions by buyers can have drastic impactson the small producers, while even small deviations inproduction costs can in turn drive the producer "out ofthe market". Apparel supply chains involving OPT tendto be more complex. To add to these OPT economicproblems is the fact that garment assembly shopstend to concentrate in certain regions - southern Bul-garia and the Republic of Macedonia (FYROM) alongthe border to Greece and Turkey - which only aggrava-tes sub-regional disparities.

Thus, OPT is generally considered a dead end as far aseconomic development goes, especially when it isbased on pure cost competition, which ultimately pre-vents the future upgrading of the value chains5. OPTcreates an 'artificial' competitive situation among thethousands of small assembly producers of which thereare an estimated 10,000 in Romania alone. Meanwhi-le, the buyers, retailers, brand name companies andbig manufacturers have increased their sourcingpower through mergers and acquisitions. On top of thechain, we find situations of concentration and consoli-dation, whereas at the end of the chain there are evermore suppliers and subcontractors competing fororders. Buyers are in the position to choose and theyselect suppliers increasingly through auctions. All thisonly further exacerbates the growing imbalances alongthe supply chains of garments.

OPT and Working Conditions: "Assembly ProductionConstitutes Slave Labour"

The consequences of this trade scheme are clear butall too often ignored. It inevitably leads to the impover-ishment of entire regions where the only survivingworkplaces involve sewing. The vicious circle of lowwages, excessive work hours, the abuse of other basiclabour rights and very limited business perspectivesfor OPT subcontractors has grown particularly constric-


4 Graziani, Giovanni (1998): "Globalization of Production in theTextile and Clothing Industries: The Case of Italian ForeignDirect Investment and Outward Processing in Eastern Europe",working paper 128, Universita degli Studi Parma; Moebius, Uta(1995): Industriegüterimporte der Europäischen Union undpassiver Veredelungsverkehr bei Textilien und Bekleidung, DIWBerlin; Kalyuzhnova, Yelena (1995): "Outward Processing

Trade between the European Union and the Associated Coun-tries of Eastern Europe: The Case of Textiles and Clothing," in:Economic Bulletin for Europe, vol. 47, p. 109-127, EconomicCommission for Europe, United Nations. For EU trade in tex-tiles: <europa.eu.int/trade/goods/textile/whatson.htm>5 Gereffi and Graziani emphasise these OPT-related problems -see given sources.

tive. Foreign buyer purchasing practices have had adramatic effect on labour because buyers exert anintense pressure on prices, delivery times and otherconditions. These pressures leave little economic roomfor the preservation of decent working conditions. Thelocal employers transfer the pressures they experienceonto the seamstresses. The seamstresses often descri-be the production arrangements as nothing short ofslave labour - 19th-century factory-style - which under-mines their health and exhausts them. And on top:without any guarantees or opportunities for the future.Workers work under slave-like conditions without hopeto eventually benefit.

However, there is a world-wide shift away from merewage competition/OPT toward full package and quali-ty production concentrated in fewer countries. Thistrend will occur most significantly in countries that canoffer a full range of textile and garment production andrelated services such as financial and business consul-ting. This situation has already begun evolving in Tur-key. Eastern Europe's near-fatal concentration on OPTover the past 13 years, has meant that the region haslost essential aspects of their textile expertise, whichmeans they will again be dependent on external "assi-stance" as they rebuild it.

While a shift to full package production offers moreroom to manoeuvre in an effort to improve workingconditions, the intensification of competition betweenproduction locations plus the increased pressure tolower costs - typical of buyer-driven supply chains - inturn, limits their elbow room.

EU-Integration - Upgrading or Marginalisation?

Former EU enlargements seem to reveal a patternwhere candidate states fear adjustment and the detri-mental impact on their traditional assets while the ori-ginal member-states fear competition, "floods" oflabour migrants and the stretching of EU finances totheir limits. The newcomers could make good dealsand the oldtimers benefited. Why should it be differentthis time?

Current negotiations are uneven and unfairly tippedtoward the current member-states at the expense ofthe new members; after all, the EU makes the rules.Candidate-states have to follow EU-prescriptions with-out much input. Candidate-states pressured to reactquickly and if they fail to do so they are characterisedas "freeloaders" and "tiresome petitioners"6. Somepoliticians have managed to successfully stir up theirrational fears of the EU's citizens towards the Eastand claim that millions of eastern Europeans standpoised to invade the Western labour markets7.

Many believe that EU membership for these candidate-states - taking the example of the OPT - will not neces-sarily be a win-win situation. EU and German compa-nies stand to profit the most, while Eastern Europeancompanies will have little access to markets due to -among other reasons - non-tariff-barriers, oligopolisticmarkets, economic power imbalances throughout sup-ply chains into Eastern Europe best exemplified by thegarment sector. According to some estimates basedon earlier expansions, trade and employment gainswill mostly occur in the existing EU countries and Ger-many in particular8.

What will happen to the textile and garment sector incountries about to join the EU?

New members , are not expecting to have to pay tariffsfor garments exported from their countries to the pre-sent EU members unless there is a new wave of pro-tective measures by the present EU countries to pre-vent new members from exporting their garments tothe EU. Theoretically, these new members will have thechance to upgrade their textile and garment sector andmove away from the OPT deadlock. Given the imba-lances described above, however, this does not seemto be realistic on a large scale. It remains to be seenwhether some Polish or Romanian manufacturers, forexample, can begin to effectively vertically re-integratetheir production process, institute their own research &development departments and their own brands -perhaps using the model developed by South Koreanmanufacturers, which in the 1970s evolved fromassembly producers to full package suppliers or brandname companies. And it remains to be seen, if an upgrading of the sec-tor in some places will improve working conditions as


6 Financial Times, May 9 2001, p. 2: Mr. Verheugen, EU's enlar-gement commissioner, in this way attacked the mentality of EU-member bureaucrats that characterised candidates in thismanner.

7 IOM calculations, International Organisation for Migration. 8 Richard Baldwin, Joseph F. Francois, and Richard Portes(1997): "The costs and benefits of Eastern Enlargement: theImpact on the EU and Central Europe, in: Economic Policy, April1997.

"There is far more manufacturing capacity in theworld than consumers and purchasing power."

(sector lobbyist based in London)


well. Taking Mexico as an example where upgradinghas been observed, it is still unclear if working conditi-ons have benefited - certainly not for women. But what will happen to that part of the accession

countries' (esp. Poland) garment sectors where upgra-ding is not successful and surviving on OPT has beco-me obsolete?

25%Brand profit,overhead andpromotion

11%Transport Taxes/ import

13%Materialcosts, profitand wagesfor factory inEasternEurope

The worker

gets ±

50%Shop profit, overhead and other expences (including VAT)

Price make-up for a pair of jeans from Eastern Europe1

1Source of the dates: ‘jeans’, P. 9, CCC, Amsterdam

1%


6. Apparel Importation Changes in the EU by Gary Gereffi

Shifts in the Regional Structure of European1 Apparel Imports from 1990 to 20002

The rings indicate the share of total European imports in U.S. dollars by partner country:1. 10% + 2. 6.0% - 9.9% 3. 4.0% - 5.9% 4. 2.0% - 3.9% 5. 1.0% - 1.9%

Total value of extra-regional European clothing imports was $24.6 billion in 1990 and $53.6 billion in 2000

1This chart excludes intra-European trade among the 15 mem-ber states of the EU (Austria, Belgium, Denmark, Finland, Fran-ce, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,Portugal, Spain, Sweden and the United Kingdom). Total appa-rel imports are for the entire European region, but exclude theformer Soviet Union.2The 2000 position corresponds to the ring where the country’sname is located; the 1990 position, if different, is indicated bya small circle. The arrows represent the magnitude and direc-tion of change over time.

3Former Yugoslavia refers to the combined output of Bosnia-Her-zegovina, Croatia, Slovenia, Macedonia, and Yugoslavia.Source: World Trade Analyzer, based on United Nations data forSITC 84 (“Article of apparel and clothing accessories”).Source: Gary Gereffi, "Prospects for Industrial Upgrading by Deve-loping Countries in the Global Apparel Commodity Chain," Interna-tional Journal of Business and Society, Vol. 3, No. 1 (2002): 27-60.

1

2

3

4

5

Switzerland

Taiwan

South Korea

Malaysia

Vietnam

ThailandBangladesh

India

Sri Lanka

Pakistan

Mauritius

MaroccoTunisia

TurkeyChinaH Kong

USA

Bulgaria

CzechRepuplic

Hungary

Romania

Poland

Former Yugoslavia

Northeast Asia

Southeast Asia

South Asia

Africa

North Amerika

Other Europe

Eastern Europe and ex-USSR

Maria is a small sturdy woman with brown hair and awarm smile. She is a shop steward in a big garmentfactory in one of Romania's big cities with a traditio-nally strong textile industry. Maria started here as anormal employee. She was considered an industriousworker, even winning various "golden hands" awards.But she eventually thought it was her duty to get invol-ved in union activities, representing workers interests.Her colleagues trusted her and suggested she becometheir trade union representative. However, in 1988, at a trade union meeting, she wasexpected to read aloud a prepared text that painted apositive - and inaccurate - picture of conditions in thefactory. But Maria stood up and refused to give thespeech prepared for her and began discussing some ofthe many real problems at the factory. The consequen-ces of her outburst were not severe but also not with-out their significance; the party secretary at this com-pany told his superiors that she had some mentalproblems. Thereafter, she was no longer allowed toattend trade union meetings and lost her position asunion rep.After the Romanian Revolution of 1989, she returnedto her position at the factory and was re-elected shopsteward. This was during a very difficult time becausemany of her fellow workers were losing their jobsbecause the company was no longer receiving enoughorders. After privatisation, the former technical direc-tor, together with a German partner, bought the com-pany. The new management tried to expel Maria andthe trade union from the factory. But Maria did not giveup, she convinced her colleagues to not give up thestruggle for their rights. She told them that without atrade union there would be no one left to strive for theirrights by assessing their labour contracts, controllingovertime, maternity leave, etc. At first, Maria was regu-larly threatened and the management even tried tobribe her with a new car and free clothes. But ultima-tely their efforts failed and management accepted herand the trade union. And from that point on she wasable to successfully represent the workers and winnumerous benefits for "her" workers. Lately, Maria has begun thinking about leaving the fac-tory to help her husband with his business. But shealso does not want to quit, especially not before shehas found a qualified replacement to continue thestruggle that she began. She is afraid that otherwisethe management may take advantage of this situationto get rid of the union.

The following story of an Eastern European seam-stress, a former factory worker, was told to a CCC rese-archer during several visits to Sandanski in Bulgaria in2000 and 2001 - recorded by Bettina Musiolek.

Roska V. established a small sewing shop togetherwith three of her former colleagues in the factories.They had had enough of working in factories foroppressive foreign bosses and so they were proud ofhaving taken that ultimate step after years of hesitati-on and they called their sweatshop a "cooperative".They have been working on joint accounts since late2000. The shared risk has eased their move into self-employment. Single home-based workers are rare inthis region because they say it is impossible to make itas a lone seamstress because you need a productionline to manufacture garments.

All four women have more than 10 years of experiencein garment factories in the Southern Bulgarian town ofSandanski, a Bulgarian spa town along the Greek bor-der. Over the past 10 years this area has become ahaven for Greek garment manufacturers. The entireregion literally lives off the assembling (see chapter 5)of garments for mainly Greek manufacturers and Ger-man retailers. The area's only other significant "indu-stries" are tourism and prostitution, and the periodickidnapping of girls who are then trafficked into the Bal-kans and onward into EU countries.


7. Maria, a Brave Trade Union Activist Roska's Cooperative by Monika Balzer


Roska's "cooperative" is located in a small room in thebasement of a private house in Sandanski. The four ofthem form part of the 10% of the area's employeeswho work out of "garage shops" and produce gar-ments exclusively as part of the assembly/ OPTsystem. 60-70% of the area's workforce is employed inthe garment industry, i.e. in OPT production.

They lease or rent machinery and borrow the neces-sary money from relatives and friends to establishtheir makeshift small production lines. Bank loans areout of the question because banks have high interestrates and require impossible loan guarantees, whichwould bankrupt them before they even got started.They are now emerging as self-reliant small entrepre-neurs and, although the work is hard they certainlyearn no less - some 115 EUR per month - than they didin the 10 years working in various garment factories.

In 1996, they led a successful strike in one factory tobring attention to their unbearable working conditions,which led to various reprisals by the employers andthey were almost blacklisted. They ultimately quit andhad no trouble finding jobs in another factory becauseof the high demand for qualified seamstresses in thearea.

While younger women may not mind working in thefactories, many middle-aged women like Roska andher friends now prefer their own small "cooperative".This may also have to do with the fact that employersprefer younger women employees, even if they do haveto be trained from scratch. Younger women have tocontend with sexual abuse and harassment, thoughsexual harassment has reportedly decreased, as haveother major rights' violations in the area, especiallysince the CCC became active in the region.

As an illustration, Roska and her three colleaguesreceived an order for over 1000 T-shirts for the Henry I.Siegel "H.I.S." label, which they had four days to finish.They each put in eight-hour days and managed tofinish the job. They received 0.20 EUR per T-shirt. Formore complicated jobs such as making blouses, theyreceive 0.50 EUR per piece. They get most of theirorders from a Bulgarian woman, who also supplies thepre-cut fabric, the yarn, and other necessary materials.This Bulgarian woman, in turn, works for a Greekbuyer-manufacturer who either exports the finished

garments directly to Western Europe, or via Greece.

Greek buyers-manufacturers have a near monopoly ofthe assembly production business in the Southernarea of Bulgaria and Macedonia. The main anxiety forRoska V. and her partners is whether the Greeks willcontinue to try to lower the price paid for their labour.The Greek owners have also thwarted efforts by the"cooperatives" from jointly negotiating their asking pri-ces and have hindered the creation of larger coopera-tives (more than 10 workers) by not paying these con-cerned for the delivered orders. Roska noted thatanother cooperative of 20 women was not paid fortheir finished product because the owner wanted toteach them a lesson and punish them for undermininghis authority; the client simply refused to pay for theorder, citing a frivolous quality excuse. This is the wayRoska believes that the Greek employers control thesweatshop industry and prevent serious competition.

There are currently some 100 cooperatives likeRoska's in Sandanski alone, meaning there is fiercecompetition among them. The four women have triedto enter into negotiations with their buyer, but thebuyer has thus far shown an unwillingness to give in totheir price demands.

The tax authorities monitor the activities of the coope-ratives closely. But they are only interested in the time-ly payment of taxes and license fees. There seem to beno local government officials who are in the least bitinterested in the issue of working conditions. Theseamstresses on the whole feel that with a bit of coo-peration from local authorities, their organising of wor-kers would be far less difficult. Roska and her partnersknow of only onetrade union active inthis area. One of thequartet has resignedherself to the currentclimate, insistingthat it is almostimpossible to trustanybody.


8. Factory Profiles from Belarus, Romania, Bulgaria and Poland

All of the companies in question have been monitoredwith respect to 8 labour standards (see page 22). Theinvestigations took place between 2001 and 2002,some of these were follow-up visits. These took theform of off-site interviews with employees, tradeunion representatives, and some interviews that invol-ved management representatives. There were nocases where any of the employees at the various com-panies had any knowledge about any existing code ofconduct! Management had this knowledge only in onecase. (labour law quoted as of 2002 - note that inmost countries of the region, labour law 'adjustments'took place)

We decided not to name any of the suppliers, becau-se of past instances where buyers - retailers andbrand name companies - had escaped their responsi-bilities for bad working conditions by their tactic of"cut and run", basically cutting the orders from a vio-lating supplier and just placing them somewhere else.And this is by no means the aim of the CCC This cor-

porate strategy is detrimental to the workers at theviolating factories and shows a lack of responsibilityon the part of the companies. In fact, the CCC wantsto avert these corporate "cut and run" scenarios whe-rever possible. Most workers clearly do not want thenames of their companies to become public knowled-ge for fear they may lose their jobs.

The aim, then, of publicising these company profiles isnot to create "scandals" and perhaps force retailersand brand name companies to make one-time-onlyimprovements. The aim is to highlight the normal con-ditions in garment producing companies with theirnumerous labour rights violations. In this manner, it ishoped that retailers, buyers and brand name compa-nies will implement often long-overdue structuralmeasures for all of their suppliers to implement andmonitor their own Corporate Social Responsibilityclaims and therefore broadly improve the labourrights situation (see chapter 12) beyond singularcases.


The 8 Labour Standards:

1. No forced or bonded labour (ILO Conventions 29 +105): Nor shall workers be required to lodge "depo-sits" or their identity papers with their employer.

2. Freedom of association and the right to collectivebargaining (ILO Conventions 87, 98, 135 andRecommendation 143): Workers' representativesshall not be subjected to discrimination and shallhave access to all workplaces necessary to carry outtheir representation functions (ILO Convention 135and Recommendation 143). Employers shall adopta positive approach towards the activities of tradeunions and an open attitude towards their organisa-tional activities.

3. No child labour - minimum working age of 15 years(ILO Conventions 138 and 182): There shall be nouse of child labour. Only workers age 15 years orabove the compulsory schooling age, whichever ishigher, shall be allowed to work (ILO Convention138).

4. No discrimination in employment (ILO Conventions100 and 111): In recruitment, wage policy, admit-tance to training programs, employee promotionpolicy, policies of employment termination, retire-ment, and any other aspect of the employment rela-tionship shall be based on the principle of equalopportunities, regardless of race, colour, sex, religi-on, political affiliation, union membership, nationa-lity, social origin, deficiencies, or handicaps. (Accor-ding to a recent EU Ministerial Council guideline(76/207/EWG) sexual harassment and "indirectdiscrimination" are also subject to this anti-discri-mination convention.)

5. No excessive work hours: Work hours shall complywith applicable laws and industry standards. In anyevent, workers shall not on a regular basis be requi-red to work in excess of 48 hours per week and shallbe provided with at least one day off for every 7-dayperiod. Overtime shall be voluntary, shall not exceed12 hours per week, shall not be demanded on aregular basis and shall always be compensated at apremium rate (ILO Conventions 1 and 47).

6. Payment of a living wage (ILO Conventions 26 and131 and the Universal Human Rights Declaration ofthe UN): Wages and benefits paid for a standardwork week shall meet at least legal or industryminimum standards and always be sufficient tomeet basic needs of workers and their families andto provide some discretionary income. (ILO Conven-tions 131, 133, UN Universal Declaration of HumanRights, Resolution 217 A (III) of the UN GeneralAssembly of 10 December 1948, Article 23).

Deductions from wages for disciplinary measuresshall not be permitted nor shall any deductionsfrom wages not provided for by national law be per-mitted. Deductions shall never constitute an amo-unt that will lead the employee to receive less thanthe minimum wage.

All workers shall be provided written and easilyunderstood information about the conditions andparticulars concerning wages before they enteremployment.

7. Decent working conditions (ILO Convention 155): Asafe and hygienic working environment shall be pro-vided, and the best occupational health and safety(OHS) practices shall be promoted, bearing in mindthe latest information about the industry and itsspecific hazards. Physical abuse, threats of physicalabuse, unusual punishments or discipline, sexualand other harassment, and intimidation by theemployer are strictly prohibited. (Conventions 174and 176 on industrial accidents, safety and health)

8. Established employment relationship: Obligationsto employees under labour or social security lawsand regulations arising from the regular employm-ent relationship shall not be avoided through theuse of labour-only contracting arrangements, orthrough apprenticeship schemes.

All wages are paid through bankaccount and taxes and social contributi-ons withheld. Wage rates varies between 70 and 225 € per month depending on the jobdescription and quotas. Supervisorsreceive cash bonuses. There is a 20% premium if an employeehas worked 5 years in the same factory,has taken no sick leave, and alwaysmeets his or her quota.

There are labour contracts. But someemployees work without contract.

Wage varies according to quota. In Feb.2002, a seamstress earned 150 € permonth, while in January, she earned 120 € because several quotas were notmet on time. Only some 70% of seam-stresses meet their daily quota in an 8-hour work day. Employer social securitycontributions are only paid on about 50 € of the wages. Workers cannotremember the last adjustment for inflati-on. There are no arbitrary wage cuts, butalso no bonuses. Quotas are increasedregularly while wages tend to decline.

Labour contracts exist. Meanwhile, otheremployees work in the "black" or underthe table, with no contract, no socialsecurity, no taxes withheld, and no regi-stration. These seamstresses also workfor a state garment factory for very lowwages (40 €) but, in this case, with socialsecurity. To survive they work two jobs.

No bonded orforced labour

Freedom ofAssociation

No childlabour

No Discrimi-nation

No excessiveworking hours

Living wage

OccupationalHealth &Safety (OHS)

Establishedemploymentrelationship

Situation at Supplier #1

This small private firm has approximately40 employees

none

There are currently no trade unions activeat this factory.The interviewees did not know if therewas a CBA.

none


Founded in the early 1990s; delivers toDutch companies/labels such as Bonita,We Women, Vroom & Dreesmann, MissEtam, Adler, Difference, Ragazzi.none

No trade unions present although only 3or 4 years ago there was a union pre-sence. Union and employer frictionoccurred during a negotiation of a fac-tory-level CBA. The entire trade unionleadership was forced to quit. The inter-viewees did not know whether there wasa CBA on any level at present.

none

Upon recruitment interview, women were asked for their family situation. For motherof small or disabled children it is very difficult to get a job.

Often, the working time exceeds 8hours a day, sometimes up to 12 hours a day inorder to meet the quota. The overtime necessary for meeting the quota is not seenas overtime .

Belorussian Suppliers for Western European Retailers and Buyers

Belorussian Labour Law

All quoted ILO Conventions areimplemented into national law (con-stitution and various labour laws)

The minimum employment age is16. Between ages 16 and 18, themaximum work week shall notexceed 35 hours. Certain types oflight employment are open to child-ren between ages 14 and 16 onlywith the consent of parents, and onlyif school attendance is unaffected.

The constitution and crime legislati-on prohibit workplace discrimination.Labour law article 16 p. 6 specificallyprohibits the refusal to employ preg-nant women or young mothers.

The standard work week consists of40 hours with 21 days of paid annualholidays. Maximum overtime shallnot exceed 120 annually; and shallnot exceed 4 hours for 2 consecutivedays. The employer is responsible forthe timely registration of overtime;compensation of overtime with timeoff is possible if employee agrees.

Employees have a right to a "just andfair" wage according to constitution(art. 42) and labour law (art. 11 p. 5).Legal monthly minimum wage is17,000 Belorussian Rubles or lessthan 10 USD/€ (Feb. 2002).With an inflation rate of more than5%, the legal minimum wage andthe actual paid wage must be adju-sted and indexed annually. Overtimebonus: minimum 100% of standardhourly rate. Official "minimum consu-mer budget" is calculated at around67 USD for a family of 4. There is noofficial poverty threshold.

The ILO Conventions have not beenratified. However, the national consti-tution and labour legislation includeOHS regulations. However, finesimposed by labour inspectors arevery low, usually some 5 times thelegal minimum wage, or, in otherwords, approximately some 50 €.

Written labour contracts are obliga-tory - this also covers part-time andtemporary employees, seasonal andhome-based workers if employed formore than 10 days. The labour con-tract must include wage rates.

The interviewed employees consider these working conditions as normal.



Romanian Suppliers for Western European Retailers and Buyers

No bondedor forcedlabour


No childlabour

No Discrimi-nation

No excessi-ve workinghours

Living wage

Romanian Labour Law

As a rule the respective ILO Con-ventions have been ratified.

ILO Conventions have been rati-fied and implemented into natio-nal law.

In order to form a trade union, 15employees of a company are nee-ded. The shop steward or tradeunion representative at a com-pany of a certain size is entitledto five paid days per month todevote to union activities and heor she cannot be fired. Companieswith more than 21 em-ployeesmust enter into collective bargai-ning negotiations.There is a CBA in Romania's tex-tile and garment industry.

There is a law against mentioningage and gender preferences in jobannouncements.

Regular work week consists of 40hours with a maximum of 120overtime hours annually. Annualpaid leave includes a minimum of18 work days. Sectoral CBA stipu-lates 40-hour work week, 120overtime hours annually andbonus of 50%, 22 days of leave.Overtime arrangements must beagreed to by trade unions. As of 1 March 2002, the legalminimum wage is 1,750,000 Lei(63 €) per month. According to ananecdotal survey, the living wagefor a family of 4 should be bet-ween 8-10 million Lei (280-350€) per month (fall/winter2001/2002).


Employer has workforce of 1,500 employees inthe cutting, ironing, and sewing departments.The factory runs on 2 shifts. It is a formerstate-owned company, now partly German-owned. It is located in a relatively well-off regi-on of Romania, nevertheless, wages are aver-age. Factory produces goods of higher qualityand prices. Factory system runs on the "lohnsy-stem"/assembly production. However, fullpackage production would be preferred becau-se of the higher profit margins. Buyers inclu-ded Steilmann, Bernd Berger, Eugen Klein,Benetton, Mariella, Betty Barkley (as of Sept.2001). 40% of goods are exported to Germany,another 40% to Italy, with the remaining 20%going to the UK and Switzerland.

None

Rather positive example due to active tradeunionists. 80% of employees are unionised,actually remaining so from former state-owned period. With privatisation, new ownerstried to scuttle CBA with attempts to intimidateand corrupt shop steward. Conditions for tradeunion activity are becoming increasingly diffi-cult. Employees increasingly neither trustmanagement nor the trade union and are veryhesitant to talk about working conditions open-ly. The management at a sister company, foun-ded as a private firm after the "Romanian revo-lution", has successfully thwarted all tradeunion activity. None

Young women are the employee preferredwhen the company is hiring.

Employees work an average of 10 overtimehours per week. Management wanted to intro-duce obligatory overtime, but trade unionshave thus far successfully blocked this effort.

Average wage (piece rate): approximately 3-4million Lei gross (approximately 90-150 €)depending on overtime and orders plus "mealtickets" of 1 € per day that can be redeemedin certain supermarkets for food. Approximate-ly 45% of wages are spent on food. Saturdaywork is often not a higher overtime rate. Allbonuses have been abolished since privatisati-on. - Management at the sister company prohi-bits employees from discussing wages with fel-low employees. Annual leave is paid at thelegal minimum wage which is also the wageusually quoted in the labour contract (i.e.,when workers work they get extra cash money,but during leave they only get the legal mini-mum wage).


Factory has approximately 250employees in knitting, sewing, and iro-ning departments. In the early 1990s,it was founded as a private Romanian-owned company. Full package produc-tion mainly destined for German retailchains (KarstadtQuelle, Metro) and Ita-lian and French buyers. Managementconsiders its prospects as very goodespecially with continued customs-freeunlimited access to EU markets. Thecompany develops its own collections,which are only sold within Romania.Foreign clients have their own designs.

None. However, again and again, wor-kers talk about the structural pressurethat is exerted by the fear of losingones job. - Structural violence com-pels employees to accept any conditi-ons offered to them; for instance, wor-kers are afraid to reject excessiveovertime, are afraid to become preg-nant, and do not unionise. In the cases of conflicts, however, wor-kers often seek for help. But mostemployees had never heard about anyattempts to organise a trade unionwithin the company and had no ideawhether a CBA existed. Management,needless to say, has a negative attitu-de towards trade union activities.

None

90% of employees are women, mostare preferably young (under 35) andsome have attained A-Levels, collegesdegrees, and some even have mastersdegrees. The factory functions 24 hours perday, 7 days a week. Employees workan average of 10-12 (2-4 hours overti-me) daily. They often also work onSaturdays and during rush periods,may even be required to 7 days aweek.

Wages are approximately 200 € inclu-ding overtime per month. Withoutovertime the monthly wage is approxi-mately 2.5-3 million Lei (80-90 €) plustravel allowance and "meal tickets" of1-1.5 € per day to be redeemed in cer-tain supermarkets. Employees do notunderstand how their wages are calcu-lated. 40-50% of wages are spent onfood.


Respective ILO Conventions havenot been ratified. Labour inspec-tion fines are low.

There are far-reaching obligationsfor employers. A copy of eachlabour contract must be filed withthe labour inspection authorities.Workers also have a "work book".

The work climate is said to be rathergood, although the ventilation system isold and needs to be updated.

Workers know about their rights due tothe activities of shop steward

The work day is stressful and usually quiteintense. Workers hardly have the time to lookup. The factory is new, has relatively new equip-ment, air conditioning, fire extinguishers and iswell lit. But some departments are very noisyand workers generally don't wear protectivenoise reduction gear. There is no canteen orlounge where workers can take breaks. The ais-les are dangerously narrow. And in cases ofaccidents, workers do not know whether theyare permitted to go to the doctor and whetherthe employer pays the costs to see the doctor.

Workers do not know their rights concerningdismissals and the stability of their employm-ent relationship. .

Occupatio-nal Health& Safety(OHS)

Establis-hedemploym-ent relati-onship



No childlabour

No Discrimi-nation

Bulgarian Suppliers for Western European Retailers and Buyers

All companies work on the "lohnsystem". Suppliers 5 and 6 work in subcontracting arrangements for Greek companies. In all 3 of the analysed companies, women make up between 83 and 95% of the total workforce.

Bulgarian Labour Law

All relevant ILO conventionshave been ratified.

Existing labour legislationgenerally obligates employ-ers to conduct business ingood faith.

Included in the labour law.The national recognition oftrade unions depends ontheir representativity.

The minimum employmentage is 16. There are extensi-ve requirements for theemployment of children bet-ween ages 16 and 18.

Labour legislation requiresequal wages for both sexesfor the same or comparablejobs.

Supplier #5

This Greek-ownedcompany has some150-200 employeesand was founded in1994. Buyers inclu-de Adler. All produ-ced goods are expor-ted to Germany andthe Netherlands.Only managementrepresentatives wereinterviewed at thislocation.

None

A labour conflictoccurred at a timewhen the tradeunion was still activehere. But today thereare no trade unionactivities.

Underage employeeswork in the com-pany, mostly in assi-stant capacity. Thelegality of theiremployment was dif-ficult to determine.

The average employ-ee age is 35.

Supplier #6

This company has some 50-70employees. Buyers include C & A;labels include B-YOUNG, CAMERA,RC Collection, Jeanswear byCrocker, Kris Reutter 1840. Thisregion along the Greek border hashundreds of mostly Greek-ownedsewing shops. Working conditionshere are considered normal.

None. However, workers talk aboutthe structural pressure that is exer-ted by the fear of losing ones job.This structural violence compelsemployees to accept their presentwork conditions.

There are at present no active tradeunions. In the beginning, there weresome attempts to form a tradeunion. But management suppressedthe efforts. Complaints are impossi-ble to convey to anyone in a positionof authority. Besides, nobody wouldfile complaints with the trade uni-ons. - It is an open secret, that inthis area trade unions are not tole-rated by Greek buyers and owners.People are afraid to reveal theirrelation to trade unions.

Underage employees often workduring the summer vacations. Theywork normal hours.

There have been cases of sexualharassment by Greek managementpersonnel and demands for sexualfavours.

Supplier #7

This formerly state-owned com-pany has some 1,600 employees.99,5% of their production is forexport, of which almost all is desti-ned for Germany. Labels include"Canda", "Berghaus", "Kant", "Ros-sini", "Ronaldo", "Daniel Hechter",and buyers include C & A, Steilm-ann, Berghaus, among others.

None

According to management, three-quarters of the employees belongto trade unions. A CBA has notbeen revised for the past 4 years.Negotiations always break downwhen it comes time to discusswages and working conditions.

None

No reports.

No excessiveworkinghours

Living wage

OccupationalHealth &Safety (OHS)

Establishedemploymentrelationship

The work week, according to Bul-garian law, is 40 hours or 8 hoursper day. Overtime maximum is setat 2 hours daily with a maximumof 60 days per year. Employersmust keep overtime log books.Real overtime is only possible incases of emergency and "intenseseasonal work". In these cases,employers are ex-empt from thelaw and can compel their employ-ees to work overtime.

Legal minimum wage as of spring2002 was 110 BGL (56 €) while inOct. 2001 it was 100 BGL (51 €)per month. Overtime bonus is50% above standard rate duringregular work days; 75% on wee-kends; and 100% on public holi-days.Meanwhile, the "Social Minimum"for a family of 4 according toNational Institute for Statisticsand two large trade unions: in2001 was set at 1,100 BGL (550€). 42% of family budgets arespent on food!

The legal obligations of employersare far-reaching and include,among other things, informationfor employees and reimbursementfor health insurance, while womenprohibited from performing certainkinds of labour. OHS committeesmust be established in every com-pany.

Labour contracts are obligatory,and cover temporary employeesas well. eed 6 months. The appli-cability of temporary labour con-tracts is limited. Apprenticeshipemployment contracts are prohibi-ted under law.

Overtime is"sometimes"performed,managementnoted.

The basic wagerate is 80 € permonth. Thecompany workson a mixedpiece and basicrate schedule.

There is noOHS commit-tee. The air isdescribed asdusty and poor.The workplaceis hot in thesummer, withinsufficient ven-tilation.

Average work day is between 10-12 hourslong with no breaks. Employees often work 7days a week, adding up to some 70-80 overti-me hours per month. Employees could refuseovertime. When workers arrive in the mor-ning, however, it remains unclear how longtheir work day will be. It is very difficult totake a day off or take one's annual holidays.This situation has not changed much since1999.

Most workers are the family breadwinners inthis region of Bulgaria. Wages are based ondaily quotas. For example, some earn 12 BGL(6 €) per day or 220 BGL (110 €) per month;and including overtime 350 BGL (180 €).Overtime is paid at 50% over the standardwage. However, not all overtime is paid at thehigher rate. There are always delays in paym-ent of wages. Payment during days off,annual leave, sick leave is paid at the legalminimum wage of 51 € per month. Only thelegal min wage is socially ensured/ coveredby social contributions. The family income of a seamstress is roughly400 BGL (200 €) per month. While the livingwage has been estimated at some 1000 BGL(500 €). And so, families learn to survivethrough subsistence farming and multiple jobholding.

There is no OHS committee. The provisionalfactory hall is often over-crowded. Half-finis-hed clothes are scattered all about. A nurse isonly present some of the time. Medical provi-sions are lacking. The work floor is very dusty,noisy, and hot in the summer. In winter thereis insufficient heat. There are no protectivemasks. During breaks, workers can only eatoutside as there is no proper canteen. It isimpossible to discuss these problems withmanagement. Workers complain about rheu-matic pains. There were work accidents,among them, an accident due to fatigue andheart problems and there was no discussion.

Labour contract only contains the legal wor-king time and the legal min wage.

Overtime is conside-red mandatory forpressing orders. It isnot recommendedthat an employeerefuse overtime.Every other wee-kend, employeesexpect to work. Com-pany managementdetermines time forannual leave.

The basic wage is1120 BGL (= legalminimum wage).Bonuses are rewar-ded for high qualitywork. Overtimebonus can run up to85% above standardhourly wage. Employ-ees are required tosign a contract pro-mising that they willnot discuss theirwages with otherpersons.

Medical provisionsare insufficient. Wor-kers complain aboutrheumatic pains.There were workaccidents.

There is only thelegal working timeand the legal minwage specified in thelabour contract.




No childlabour

No Discrimi-nation

No excessi-ve workinghours

Living wage

Occupatio-nal Health& Safety(OHS)

Establishedemploym-ent relati-onship

Polish Labour lawAll core conventions have been ratified.

Included in labour law.

There are extensive provisions to protect theright to organise. Labour law provides for pro-tection against dismissals of shop stewards, forexample. CBAs (chap. 11 labour law) must besubmitted to labour inspection and registered.

Minimum employment age until 1 September2002 was 16. After "EU-harmonisation" theage will be 15. There are detailed conditionsfor employing children under 16.

Since 1996, labour law guarantees dignity ofemployees. There are general regulationsagainst discrimination contained in Poland'slabour laws.

ILO Convention 1 (8-hour work day) has notbeen ratified, but has been implemented innational labour law. Maximum work week in2001: 42 hours, 2002: 41, 2003: 40. Overtime maximum is 4 hours per day, 150hours per year. Overtime bonus for the first 2hours is 50% above standard wage, thereafterthe rate is 100% above standard wage.

ILO Conventions 26 and 131 have not beenratified, but national labour law has coveredthis since 1956 and it was renewed in 1997. Legal minimum wage must be adjusted to thecost of living (inflation). - The minimum wageas of 1 Jan. 2001 (art. 77 labour law) is 760PLN (200 €) gross. The Polish "Institute forlabour and social issues" IPiSS calculated a"social minimum" for a family of 4 at the endof 2000 at 1925 PLN (ca. 550 €).There is no CBA for the garment industry.

Labour law provides for things like the displayof First-Aid-Instructions in workplace. Everycompany must have an accident log book.

Included in labour law.


Factory has approximately 600 employees. It is a formerly state-ownedcompany, now private Polish ownership. Two-thirds of production is underthe "lohnsystem". 80% of production is for export, mainly to Germany. Buy-ers include Gerry Weber, Leithäuser.

None - Workers sometimes talked about the structural pressures involvedin the fear of losing one's job. This kind of structural violence forcesemployees to accept the working conditions as they are - such as being for-ced to work on Sundays. The company is located in a impoverished, former-ly industrial area of Poland with an unemployment rate of roughly 20%.

Trade unions are active in the workplace but are not trusted by most of theemployees. On top of that, some employees fear management reprisals ifthey do actively engage in unionisation activities.

None

Elderly women and younger mothers are seldom hired. Only women consi-dered to be in the "most productive" age can stand the work stress. Pregnantwomen take sick leave because they cannot anymore stand the quota pres-sure.

The company sets high production goals and high level of labour intensity.Employees often end up working over 60 per week. They feel pressured toaccept all the overtime. Overtime is often necessary just to fulfil their quotasand thus is not considered overtime. When employees arrive in the morning,they often do not know how long their work day will be. Management decidesupon annual leave. The state labour inspection agency reports that 98% of the inspected com-panies in 2001 violated the regulations concerning work hours and overtime.

Wages are paid regularly, however, they did not keep pace with the rate ofinflation and the increases in quota pressures. The average wage is approxi-mately 850 PLN (240 €) gross. The legal minimum wage was only paid if a worker was not sick and alwaysmet the quota. Employees don't understand how their wages and the quotasystem are calculated and why certain deductions are made.Average wages in Poland in Dec. 2001 were 2,047 PLN (560 €); meanwhile,the average wages in the garment industry in Dec 2001 were 984 PLN (ca.270 €), which is only approximately 50% of the overall average wage. Thelabour inspection agency reports that 63% of all inspected companies arenot paying wages on time or not in full.

In the workplace, emergency exits are often only partly accessible. Employ-ees complain about bad air, dust, and all of the resulting health problemsrelated to these conditions. Workplace stress also leads to various OHS-rela-ted problems.

All employees have a labour contract. Employees can be fired if they do not reach their quotas.

Polish Suppliers for Western European Retailers and Buyers



In 1999, a Bulgarian journalist was investigating com-panies in Bulgaria near the Greek border. Not longbefore the start of the 2000 European football cham-pionships she discovered Savinia, a sportswear sup-plier for Adidas and Nike. Savinia is a Greek-ownedcompany consisting of two factories with 120 and 70employees each, 90-95% of whom were women. Thiscompany is not unlike thousands of other small andmedium-sized companies in the region surroundingthe border town of Sandanski, a spa town swaddled ina breathtaking mountain valley. Greek garment manu-facturers are constantly seeking cost advantages aswell as E.U. and government subsidies to help withinvestments schemes beyond the border. All of thesefirms produce their goods under the disastrous "lohn-system" - the outward processing trade scheme (seechapter 5).

The Bulgarian journalist discovered a situation in thiscorner of the Balkans, similar to situations the CleanClothes Campaign has been discovering for more than10 years all over the world - among them, other Adidassuppliers. These companies offer starvation wages -between 70 and 100 EUR gross per month - wages thatnobody in Bulgaria can hope to survive on. The com-pany also insists on extreme workplace pressures byinsisting on high quotas, excessive and erratic workinghours with overtime way above the legally permittedmaximum. Employee's wages are paid partly in the "black" (underthe table), which in turn requires a "double book-keeping". Employees cannot afford taking annualleave or sick leave because during these times theyare only paid the "official" wage, which is the legalminimum wage - approximately 45 EUR per month(1999-2000 figures). It is unthinkable for an employeeto request maternity leave, ergonomic chairs, betterlighting, better heating or air conditioning, less dust,more space in the workplace, or accessible emergencyexits. For 10 years now, everything in the workplacehas been temporary and provisional - except, of course,the work, which always has to be of the highest quali-ty. Employees as well as local trade unionists have cometo see these conditions as the norm. Sexual haras-sment including the demand for sexual favours underthe threat of losing one's job is not uncommon andmostly involves Greek managers harassing Bulgarianseamstresses. Greek managers demand submission

from their mostly female employees utilizing a combi-nation of sexist and racist practices that are predicatedon the "natural" superiority of the Greeks.

In the spring of 1999, just prior to the Bulgarian jour-nalist's investigations, an unsuccessful strike tookplace in Savinia. One of the only positive effects of thestrike was that the workday became more standardi-zed. But on the negative side, the attitude of theowners toward the trade unions only got worse. Theowners went so far as to try to ban trade union activi-ties at their factories and even threatened to relocateif the unions persisted. This was not the first time thatworkers had been confronted with the threat of reloca-tion. The simple fact is that seamstresses are often thefamily's breadwinners. The region's economy is prettymuch dependent on garment production or "lohnsy-stem" to be more precise, with the only other regional"industry" being tourism - and the trafficking of womenand girls.

Despite the stressful situation, however, the local part-ners agreed to publish their findings on Savinia duringthe Clean Clothes Campaign's (CCC) activities thatfocused on the 2000 European football champions-hips.

How did Adidas-Salomon respond?

It was only in early 1999 that Adidas began reacting tothe many public protests that called attention to thehorrible working conditions in the workplaces of itssuppliers. Adidas' strategy was to publish its own"Standards of Engagement", which included a charterof labour standards that it supposedly required of itssuppliers. Adidas also employed an NGO-representati-ve as the "global director for social and environmentalaffairs".

In the summer of 1999, just before the Bulgarian jour-nalist's investigation, Adidas checked the working con-ditions at Savinia, which noted some violations such asmissing fire extinguishers and insufficient lighting. Ofcourse, these are the easiest sorts of infractions todetect. Meanwhile Adidas did not make much of aneffort to investigate the many more serious violationsas detailed in this multinational's own code of conduct. During the CCC's European football championshipcampaign, the company's "global director" assured the

9. Once upon a time Adidas produced at Savinia in Bulgaria


CCC that, in the case of Savinia, the existing conditionswere unacceptable and that Adidas was going to takegenuine steps to remedy the situation. He noted thatAdidas was going to take a more pro-active approachby employing its own staff to inspect the working con-ditions in the factories of its Eastern European sup-pliers to bring them in line with its own standards. Adi-das checked the Savinia factories againonly to discoverthat no one was working more than the legally permit-ted 12 hours overtime and that wages had improved.These kinds of conclusions only beg the question ofjust how serious Adidas' own monitoring system can be.

Have there been any concrete improvements in wor-king conditions?

Another joint visit to the Sandanski region by the CCCand its Bulgarian partners in September of 2000 cameup with decidedly mixed results. The worst of the con-clusions was that Adidas and Nike had completelystopped placing new orders here. Meanwhile, themanagement had intensified its intimidation tacticsagainst trade union activities. Some workers were for-ced to sign a statement that they promised not to enga-ge in trade union activities. There were other grievan-ces as well. All in all, the Savinia workers were facingincreased company intimidation tactics. Subsequentinvestigations in 2002 revealed pretty much the samesituation. Nobody in the factories had ever heard of acode of conduct, while the local trade union represen-tative was only informed of the code's existence by theCCC. What had happened to all of Adidas' high-mindedpromises?

Adidas-Salomon: Cut & Run

A case investigated by the CCC in El Salvador revealedsimilar developments. In this case, Adidas negotiatedat length with the German CCC about establishing anindependent verification of labour standards thatwould have meant concrete improvements in workingconditions. But, after 2 years, Adidas decided to breakoff the negotiations - at about the same time they weresevering their business ties with their Salvadoran sup-plier! Subsequent investigations concluded that in ElSalvador as well as in a case in Indonesia nothing hadactually changed concerning the working conditions attheir suppliers. The problems in El Salvador remain unresolved and

include impediments to the right to organise, excessiveand unplanned working hours, starvation wages, andobligatory pregnancy testing.

Positive impacts realised through national grassrootsnetworking and international pressure

However, the Sandanski region has also seen somepositive effects, mostly as a result of the local activitiesof NGOs and trade unionists as well as that of interna-tional pressure. It actually led to some unique actions -by Bulgarian government standards. The state's labourinspection agency actually employed additional per-sonnel to the Sandanski region; normally labour ins-pectors are only located in the district centres. On topof that, Bulgaria's state labour inspection agencydeclared the garment industry as its focus sector for2001.

Moreover, the local trade union representatives confir-med that sexual harassment was no longer beingreported. The problem had obviously diminished dra-matically. It used to be that women came to the unionrepresentative only because there was no one else toturn to.

The pro-active approach of H&M

Any progress that has been made has not been achie-ved by Adidas, however. Instead, it has come becauseof the efforts of local and international CCC activities.Until now (2002), there had never been a known casewhere Adidas would ever have voluntarily pressuredGreek manufacturers at the factories of their Bulgariansubcontractors to implement Adidas' "standards ofengagement" - never mind facilitating cooperation bet-ween state authorities and Adidas itself. Instead, Adi-das preferred to focus on pressuring state tax authori-ties to foil the production and sale of counterfeits inBulgaria. Their cooperation with state authorities onthe improvement of working conditions was unknownuntil only very recently.

Meanwhile at H&M it has been a very different situati-on: this multinational has chosen to approach stateofficials to start a dialogue about how labour standardscan be fully complied with. This is a positive approach,although it remains to be seen what the results of thisdecidedly pro-active approach will be.


We only recently began to successfully raise Roma-nia's public awareness about working conditions in thegarment sector particularly in the context of globalisa-tion. This initiative was realised with the cooperation ofthe Clean Clothes Campaign. Romania is one of thelargest garment exporters to Western Europe. Prior to1989, the textile and garment sector was already oneof Romania's strongest production sectors. Romania'shighly qualified work force and pre-existing infrastruc-ture attracted numerous big name brands who esta-blished production facilities here. In Romania's effortsto integrate itself into the EU market, it has welcomedforeign investment with open arms and at almost atany price. But the reality of a dozen or so years ofRomania's pro-business policies has clearly demon-strated that this "foreign capital" is only profitable forthe foreign investors themselves. Local investmentremains low and and the economic situation for Roma-nian workers has grown steadily worse. Recently, for-eign investment in Romania has decreased, which hasincreased the undermining of Romanian employees'working conditions and wage rates. The basic litanybeing that in order to remain competitive in the face ofinternational competition Romanians should accepttheir working conditions and feel lucky just to have ajob.

The conduct of multinational companies in Romaniaand any threat of potential litigation against them iscurrently a very delicate issue in Romania. Only veryrecently, People only recently began to comprehendthat they do not have to accept every aspect of "priva-tisation" and that they do not have to blindly trust inter-national "big names" without any recourse to a verifi-cation process. The successful prosecutions of somesteel plants and telecommunications companies, whohad broken Romanian law, opened the eyes of manypeople.

In the garment industry, as the situations in the largeformer state-owned companies became increasinglydifficult, people began to openly question the benefitsof privatisation. However, this increased suspicion hasonly occurred in unionised companies. Meanwhile, thenumerous new private companies employ the veryyoung, who often have no idea about theirs rights andare ready to accept their lot. The common reaction is:"In a private company workers must be willing toaccept completely different working conditions than

existed prior to 1989; they must be more flexible andobedient to management to keep their jobs".

In conclusion, the Clean Clothes Campaign's activitiesin Romania (as well as in the rest of Central andEastern Europe) concentrates on three areas: 1. aneffective education programme, especially for theyounger generations who increasingly find themselvesworking in the "informal economy"; 2. the effective dis-semination of pertinent information and educationalmaterials, written for the common worker and relatedto their basic labour rights; and 3. the development ofstrong internal public support and the involvement oflocal authorities who need to be informed about therealities concerning the multinational companies ope-rating in Romania.

Furthermore, consumer campaigns should be initiatedin the various EU countries to help "convince" themember states' largest retailers to take full responsi-bility for the working conditions found in their supplychains.

10. New Initiative for Social Standards in Romania by Mariana Petcu

International meeting of CCC-activists in Hamburg


Investigating Working Conditions in the Garment Indu-stry in Bulgaria by BEPA - Bulgarian European Part-nership Association, Sofia, Bulgaria1

Features of the Garment Sector in Bulgaria Since the mid 90s the following trends were observed:1. Rapid growth in a number of the companies in the

sector - the numbers given on business entities in"manufacturing and trade in clothing" vary between3,000 actually functioning and 18,000.

2. Increase in the number of the employed personsduring the last 12 years by an average of 10,000annually, while the general employment in the eco-nomy has dropped. However, these data reflect onlypartially the real picture due to the prevalence ofinformal work: in registered firms not all of the wor-kers have regular work contracts; not all productionworkshops and all employees have been registered,part of the operations are performed by home wor-kers, etc.

3. The Bulgarian garment industry is clearly export-ori-ented and has a constantly growing export volume.This, however, does not mean that for Bulgaria thisexport is characterized by high profitability and cur-rency return. The EU is the most important exporttarget (80%). The biggest customers are Germany(21 per cent), Italy (18 per cent), France (17.5 percent) and the USA (9.5 per cent). The garment indu-stry is the no 1 export sector since 2002.

4. About 95% of all garments are manufactured underthe "Lohnsystem" (assembly production/outwardprocessing trade).

Rapid PrivatisationAlong with the above employment trends, a significantchange in the forms of ownership of the enterpriseshas been unfolding. In 1996 in the private enterprisesof the economy only 47.4% were employed, in 200070.8%. In the garment industry this process is muchmore obvious - from 55.0% for 1996 for those employ-ed in privately owned enterprises, to close to 100 % in2001.

In many former state-owned companies, the manage-ment and the workers acquired the ownership of the

enterprise. Along with that, however, almost everywhe-re, including the garment industry, the directors in per-son or through proxies, created parallel companieswhere the valuable information and the intermediaryactivities were concentrated. Thus the production ent-erprises were presented as "sinking" and the profitremained for the parallel company. Plenty of suchcompanies can also be found in the garment subcon-tracting chains in the country.

Employment and genderMany small and medium-sized firms were establishedin looking for a way out of the high unemployment,both for men and women. In most cases, the ownersare men while the workers are women, made redun-dant from enterprises that have either been closeddown or have gone bust. One can also come acrosswomen in managerial positions but usually they arenot owners.

Gender composition of the personnel and of theemployment: Owners - 90% menManagement - 80% menAdministrative personnel - 50% menWorkers in production - 90% womenHome workers (domestic and external) - 100% women

While for men, out of a total of 24 respondents, 18have permanent contracts, for women the picture isdifferent. Out of a total of 146 respondents - 46 workare on permanent employment contracts; 21 work onshort-term employment contracts; 75 work on a piece-rate basis which places them in a precarious position;1 has indicated that she works without contract; 4 didnot respond.

Working ConditionsThere are some isolated cases of enterprises wherethe working conditions are good, the pay is decent andthe requirements of the law are complied with. A rat-her good example is the German owned company"Pirin Tex Production" EOOD with nearly 2,000 employ-ees. As a whole, however, the picture in the garmentindustry is quite gloomy. Here is a description by labourstandard of the working conditions according to a sur-vey done between 2001 and 2003.

11. Making the Hidden Visible by BEPA

1This article is Bettina Musiolek's excerpt from a survey reportby BEPA (2003), which forms part of the overall researchreport on garment industry subcontracting chains in ninecountries from the Women Working Worldwide Project "The

rights of workers in garment industry subcontracting chains"by Women Working Worldwide, UK, Asian NGOs and BEPA, Bul-garia.


Employment is freely choosenThe workers have chosen their job really voluntarily.However behind this "choice" there is strong economicconstraints hidden, almost dead lock. Almost all res-pond that they do not have other proposals and in casethey find another job with better remuneration, theywould leave. This conclusion could be supplemented bythe responses related to overtime. In many cases theovertime is also voluntary - for additional payment, inmost of the cases cash in hand, and not according tothe required premium rate. But in most cases the over-time is 'voluntary' under the threat of firing and loosingthe job. There are also cases of compulsion - lockingtill the execution of the order. Such overtime ends latein the evening or during the night and is not compen-sated according to the amount, terms and manner pro-vided for in the Labour Code (Chapter 8, para. II - Art.143 -150).

There is no discrimination in employmentThe workers are unanimous that with respect to theremuneration there are no cases of discrimination forequal work. There is no discrimination at the workplace reported with few exceptions, unfortunately rela-ted to foreign employers. The gender composition ofthe workforce as described above however givesserious grounds for consideration whether there is orthere is no gender based discrimination in the garmentindustry where women are underrepresented at theleadership level while seamstresses make up to 100%at the factory level.

Childlabour is not usedAccording to the responses in some enterprises duringschool holidays in the South-western region there arecases of working children between 14 and 18 years.The incentive is additional family income. The workersreport that children carry out auxiliary activities withinthe adults' working day duration. It is not known whe-ther the employers comply with the special legal requi-rements concerning work of persons between 14 and 18.

Freedom of association and the right to collective bar-gaining are respectedThe private form of ownership and the fact that most ofthe enterprises are small and medium-sized are themain reasons for the absence of workers' organizatio-nal structures as a prerequisite for the protection andstanding up for workers' labour rights.

According to the answers it is clear that there are tradeunions in the few big enterprises and in some mediumsized, while there are no such in all the small and mostof the medium sized enterprises. In the enterpriseswith trade union organisation structures bad attitude ofthe employers towards trade union members, cases ofpreventing trade union activities and even firing arereported. In some enterprises signed collective bargai-ning agreements exist but their updating is difficult andin others an agreement could not be reached. The maindemands of the trade unions have been related towage increase, regulation of the working time, impro-vement of occupational health conditions. In the enter-prises without trade unions there is no other form ofworkers organisation. There are some demands tocreate a trade union organisation but they face theemployer's refusal. The main argument to create suchorganisation is to sign collective agreement.

The workers believe that it is impossible to raise theissues related to the improvement of working conditi-ons - individually or collectively. All of them waive thepossibility to protect their rights in court. There is noconfidence that improvement is possible through even-tual protest - individual or organised by trade unions.The possibility for leaving the enterprise is more likely.Almost all are ready to leave the job in case they had abetter opportunity. However, they consider trade unionas the only possibility to submit their demands or pro-test in case of violation of their labour rights. None of the workers knows anything about companies'Codes of Conduct.

Living wages are paidAs of 1 January 2003, the legal minimum salary permonth for the country is 110 BGL = 55 EUR. Those employed in production, mostly women, receiveremuneration on a piece-rate basis ranging between65 and 125 EUR per month, with rare exceptions, resul-ting from overtime. However, it is a common practicethat they are not paid for their overtime with the rateprovided for in the Labour Code. The administrative per-sonnel receive fixed remuneration, no piece rate.Packers are getting the lowest wages. In this positionwomen are paid less than men. Similar is the situationwith controllers where for equal work; women are paidless than men. In some enterprises there are someextra-payments for work clothing or for transport. Wor-kers report regular delay in salary payment. There are


many cases of illegal salary deductions. The additionalpayments beyond the legal minimum wage are paid in-hand. The result is that workers suffer the loss of non-payment of health and social insurance and for thestate - less revenue in social security funds.

For home workers, the picture is somewhat different. Itcomprises a lot more aged women who - having beenlaid off - have little chance of finding permanent jobs.Resulting from age and professional deficiencies, theyare unable to stand the physical burden of working atthe factories. As for their family status, the majority aremarried. Half of the interviewed women are the onlywage earners in the family. Their husbands are unem-ployed, doing some kind of agricultural work and hou-sehold activities or services and/or working as homeworkers. The home workers in the sector, however, areonly women, and they are involved in sewing and/orrelated supporting activities. They work on the basis ofa verbal agreement, payment is on piece-rate.

Generally the remuneration is not enough for both theindividual's subsistence and as a contribution to thehousehold budget. This is despite of the fact, that insome cases other members of the family are alsoemployed and sometimes there is income in the hou-sehold from other sources, such as farming, etc… Evenwith additional incomes the family concerned is not ina position to earn a living wage. The big gap betweenthe living wage and minimum wage is striking. In Bul-garia a family of four needs about € 650 - 700 permonth in order to subsist. If seamstresses work 12 - 16

hours a day without breaks, the workers can earn up to€ 225. Still this is not sufficient. Except for one, all workers have complaints related tothe remuneration but they are afraid to raise them orthere is nobody to address. The workers point out thatthey are under constant pressure to reduce the pro-duction costs in order to be competitive. This competi-tion threat is the justification for the unpaid extra wor-king hours and for locking the workers in the factoriesuntil they have executed the order.

Unfortunately, the increase of persons employed in thegarment industry is accompanied by a gradual reduc-tion of the ratio between the average annual salary inthe garment industry and the average annual salary inthe economy as a whole. Thus for 1996 the averageannual salary in the garment industry was 69.7% ofthe average annual salary in the economy, and in 2000it had already dropped to 65.2%.

The reduction of those employed in the economy wasaccompanied by a certain improvement of the workpay, while in the garment industry the reverse processhas unfolded - an increase of those employed with alowering average pay.

Hours of work are not excessive(See above.) Here the number of violations is the grea-test. The working day continues at least 10 hours withvery few exceptions in the big enterprises. Workerswork overtime "very frequently", "all the time", "everymonth", "in cases of urgent orders", etc… Again exceptfor the big enterprises, the overtime is 70 to 150 hoursmonthly. The working week is 6-7 days, including Satur-day or Sunday or both. Very often a refusal for overtimeis a pretext for dismissal. In Regional Labour Inspecto-rate reports it is pointed out that overtime is the mostdifficult to prove. In the majority of enterprises during the annual leave -which is theoretically granted - workers are paid thelegal minimum wage only. Therefore only very few wor-kers take leave. At the same time it is very difficult toget it. There is evidence for compulsory use of leave - acouple of days in periods when there are no orders. Sothe annual leave is wasted and it is hard to plan. A recent trend is the calculation of "accumulated" wor-king hours without taking into account the real overti-me and applying the rules for its payment.


Working conditions are decentWorkers in all enterprises complain of high temperatu-res in summer. None of them has air conditioners. Thedust level is too high in almost all enterprises. Thatrequires the use of breathing devices, which are notavailable. Lighting is not sufficient. There are com-plaints related to noise level, bad sanitary conditionsand many more complaints. Due to bad occupational health & safety conditionsthere are accidents. They may be different - from faintsto injuries due to failure and obsolete equipment used,lack of needle protectors, of steel gloves for cutters,etc. Medical services are not provided, except for thebig enterprises.

The employment relationship is establishedThe answers outline the workers' fears for their jobs.Pressed by the high rate of unemployment and highliving costs, they are forced to keep silence about theviolations, although most of them are aware of theirrights without being especially informed. Such violati-ons may be lack of labour contracts or labour contrac-ts based on minimum wage, non-payment of statutorysocial security contributions, benefits for length of ser-vice and overtime, difficulties in using the holidaysduring periods preferred by workers', etc.

Experience shows that employment contracts are con-cluded in so many different forms that in some casesit is even hard to assess whether they are short-termcontracts or permanent ones. At the same time, to thequestion "Are orders regular?" in nearly 2/3 of the ent-erprises the answer is positive. This assertion is cont-radictory to the workers' precarious situation. This

contradictory picture is exacerbated by employers'efforts to consider labour in the garment sector "sea-sonal" or "temporary" which would deprive workers inthe sector of major rights - primarily working time limi-tations and obligations concerning labour relations-hips. One trade union and BEPA could prevent the cor-responding legal decisions from entering into force.

"In garment factories it is a common practice to stick notices about fines and penalties

for such improper behaviour as speaking or drinking water during work time,

for sitting idle or resting, or frequent visits to the toilet.

The women engaged in the garment industry work 10 - 14 hours a day, six or seven days a week.

Grave non-compliance with conditions of labour safetyoften leads to accidents in the factories."

(BEPA researcher)


A recent case in Bosnia-Herzegovina involved the Sala-mander shoe multinational, where it simply cut itsbusiness ties with a supplier when its employees -represented by a trade union - demanded that Sala-mander abide by the laws that required companies topay the national legal minimum wage. The shop ste-ward who helped organise the minimum wage strike,declared "This went way beyond what we couldaccept".1

In 1989, an action much like this one in the Philippinesat a subcontractor of C & A inspired the establishmentof the European network that came to be called theClean Clothes Campaign [CCC].2 The women workersat IGMC, located in the Bataan Free Trade Zone, werefired for demanding a legal minimum wage. Their stri-ke continued for over a year. This lockout in a clothingfactory in the Philippines became the focus of attenti-on for a number of groups active in the solidarity move-ment in the Netherlands - C&A's headquarters locate inthe Netherlands - and the UK. At the time, this kind ofissue didn't seem to be the norm, but that was onlybecause there was virtually no information available inWestern European countries about the way consumergoods were being produced, and how this affected(mostly women) employees. It was considered bignews that companies like C&A produced in farawaycountries under bad conditions, news that there werewomen involved, and especially news that some peo-ple held a retailer company such as C&A responsiblefor all of this. After all, what did C&A have to do withwhat was happening in the Philippines? Not their com-pany, not their country, not their employees, not theirbusiness. Or so it seemed.

A public protest that included the burning of C & A clo-thes in front of its flagship store in Amsterdam led tofights between activists and police. This led C & A totake some initial measures, although publicly they con-tinued to deny any responsibility for what had happen-ed at the IGMC company in question. They published aleaflet on the company's buying practices and distribu-ted them in all of their stores in the Netherlands. Theywrote letters to their representatives in the Philippinesencouraging them to negotiate a settlement with theIGMC.

In the mean time, the activist organisations involvedspoke with the local worker organisations. More orga-nisations began to show an interest in the issue. Anational day of protest against C & A's overseas prac-tices was organised. The IGMC workers negotiated asettlement that included the payment of some backwages. But the main demand, the payment of mini-mum wages, was not met. The coalition of Dutchactivist groups continued and it was out of this sustai-ned initiatives that the Dutch Clean Clothes Campaignwas officially founded in 1990. More research on C & Acontinued to reveal new violations, in places like Bang-ladesh, India, and even closer to home in the sweats-hops still located in the Netherlands. The CCC publis-hed a classic report called "C & A: The Silent Giant".

Bottom-up Globalisation

Clearly, this initiative struck a nerve: campaigning for"Clean Clothes" provided a concrete way of taking upthe political demands of womens' and labour organi-sations in the South at the time: change the behaviourand the policies of Trans-national corporations [TNCs]and governments in the North, since they remain ulti-mately responsible for the way people in the South andthe East live and work.

In the early 1990s, German women's groups beganinterviewing personnel in the various retail chainsabout the conditions under which the clothes they soldwere produced. In 1995, the German Clean Clothes

12. Escaping the Vicious Circle

1 Scherrer, Peter (2001): "Ein Staat im Staate - Leben in derRepublika Srpska", in: VWD 2 This description of the emergence of the CCC is based on thearticle "The Code Debate in Context: A Decade of Campaigning

for Clean Clothes" by Nina Ascoly and Ineke Zeldenrust; publis-hed in German in: Bettina Musiolek et al: Gezaehmte Mode-multis, Frankfurt-am-Main and Vienna, Brandes & Apsel,1999.


Campaign was established, joining the increasingdemand for a social charter that included 8 basiclabour standards that retailers could undersign andagree to uphold. With the predominance of "globalisa-tion" as economic reality, companies can no longersimply ignore their social responsibilities in the pro-duction of the clothes they sell in their retail stores andhope to go undetected. It is because of the tirelessefforts of the CCC that retail chains and brand namecompanies have had to respond with positive effortson their part. For instance, C & A, among other fashionmultinationals, has agreed to adopt a social code ofconduct.

It is fairly well known at this point that West Europeanconsumers are aware that many of the clothes theybuy are made in appalling working conditions in Asia.But these same fashion multinationals also have theirgoods produced in Eastern Europe. And to make thehidden reality visible, the CCC engages in on-goingresearch that investigates working conditions in thisregion in conjunction with partners in each country.The special conditions found in Eastern Europe (seechapter 1) make doing research and networking a par-ticular challenge - as collaborative partners have madeclear earlier in this brochure. This is exacerbated by thefact that solidarity groups in Western European coun-tries have no tradition of working collaboratively with

groups from Eastern Europe, while there are long-termrelationships with organisations in Asia, Latin Americaand Africa. But some intrepid groups and individuals inthe region have managed to establish fruitful relationswith the CCC.

Independent Verification of Minimum Labour Stan-dards and the Chief Actors in Production Countries

A current hotly debated issue involves the rules inclu-ded in accurately verifying the social standards esta-blished by the various fashion multinationals in their"ethical charters". Questions arise about who verifieswhom and how the monitoring and verification proce-dures should be instituted? In response to some ofthese issues, the European CCC has developed a uni-que expertise in this field and has been regularly con-sulted by various international organisations. The CCCmaintains that it is of central importance to involve themajor stakeholders in the production countries in que-stion. The rules for the independent and external veri-fication of labour norms cannot be developed without

What is Corporate Social Responsibility?

Corporate Philanthropy? Social or environmental cha-rity projects financed by multinationals that don'thave anything to do with the company's actual opera-tions?

A PR policy? A ploy?

Simply respecting the laws of the host nation?

The concept of CSR refers to the notion that compa-nies have a responsibility for the social and environ-mental impact of their activities in their host coun-tries, the idea of a "social contract" between acorporation and its host society. Corporate SocialResponsibility (CSR) is comprised of a company'sactivities based on the adoption and proactive imple-mentation of national regulations as well as the Uni-versal Human Rights along their entire supply chain,with particular focus on the aforementioned mini-mum social and labour standards.


the involvement of the Southern and Eastern partners.Multistakeholder Code Initiatives in the sector are com-prised of business associations, trade unions, nongo-vernmental organisations (NGOs), and governments.They include the Ethical Trading Initiative in the UK,which emphasises co-operation with the various localstakeholders.

Some US and Western Europe garment retailers haveinitiated considerable activities within their CorporateSocial Responsibility policy. They have institutedvarious monitoring activities by their own personnel orthrough hired commercial auditing companies tocheck the social standards (as stipulated in their codesof conduct) at their suppliers and producers. This is cal-led "internal monitoring" because it involves a perma-nent process of checking the implementation of a soci-al policy within the company and its suppliers. Theseefforts by companies themselves are long overduefirstly because of the inhumane conditions underwhich garments are produced, secondly because manyof the investigation findings confirm the fact that mostemployees know almost nothing about codes of con-duct (see chapter 8). Management knows almost aslittle about the existence of codes of conduct.

But even a company's best efforts to monitor theimplementation of their own declared standards arestructurally limited. What kind of results will a Roma-nian social auditor - subcontracted by an internationalconsulting firm - come up with concerning working con-ditions when he is hired by the buyers or suppliers?How can he assert any kind of pressure on the retailerand supplier concerning the introduction of correctivemeasures? The auditing profession is obviously trap-ped in a conflict of interest.

Plus there are conflicting interests at the retailer orbrand-name level because a buying or sourcing policyis in direct conflict with basic CSR policies, which usual-ly entails a permanent effort of in-house social mana-gement and a long-term relationship with suppliers. Incontrary purchasing policies are geared towards get-ting the best prices and so the cheaper the sourcingprice/costs the higher the bonus for the buyer. Buyersare also interested in ever-quicker delivery times, inshifting the commercial risks to the supplier (just intime), and serving the short-term interests of sharehol-ders for quick profits. In a word, buyers continue to

exert ever-greater economic pressures on their sup-pliers, which is always at the expense of those at thebottom of the production chain, the seamstress.

These kinds of structural limitations and a lack of cre-dibility of the internal social monitoring system employ-ed by retailers and brand-name companies can only berectified by instituting an external or "independent"verification system.

Companies have generally tried to water down theircommitments to social responsibility - in both words

From Recognition of CSR to the Implementation of Labour Standards

World-wide protests have convinced most retailersand brand name companies to accept some level ofsocial responsibility in the form of corporate codes ofconducts or "ethical charters".

The Obligations Involved in the Implementation andVerification of Codes

The Obligations of retailers and brand name compa-nies include:

1. the implementation of codes at the workplaces oftheir manufacturers and suppliers;

2. the internal monitoring of this implementation; 3. the involvement in developing an independent,

external verification of the accepted multistakehol-der codes.

The Obligations of the fashion multinationals, civilsociety, and governments in the chief consumercountries include: Becoming active in bodies that oversee the indepen-dent, external verification of labour standards.


and action. They consistently:reduce the number of labour standards included intheir codes; externalise the responsibilities by shifting them tothe suppliers; dilute the rules for the monitoring and verification ofthe codes of conduct so that they become basicallylow-profile, voluntary.

Meanwhile, retail chains and brand name companieshave developed their own social regulatory systemswith the aim of setting certain standards. To increasetheir credibility vis-à-vis the public, they incorporate edi-ted versions of criticism and the conclusions of less-cri-tical NGOs. TNCs act as an interest group that tries toinfluence the international CSR agenda.

The Dutch Fair Wear Foundation developed a crediblesystem for external verification of minimum labourstandards. This organisation carries out verificationsonly in co-operation with local partners including trade

unions, NGOs, business associations, and variousgovernment agencies. An essential aspect of theseverifications are the anonymous off-site workers' inter-views - an instrument that cannot be performed with-out the participation of local partners. Credible wor-kers' interviews are seldom carried out by socialmonitoring agencies hired by corporations to performtheir "social audits". The Fair Wear Foundation has carried out various pilotaudits of its own code of labour practices in places likeEastern Europe and is presently evaluating the datathey have collected there. Romanian and Polish tradeunions and NGOs have assessed the value of pressuresapplied by foreign buyers and clients as an effectivetool for change. The early evaluations of the FWF stra-tegy point to substantial positive effects for the localemployees when it comes to the exercising of theirrights as workers, which includes the right to organise,and it offers them some room to manoeuvre as theyattempt to realise substantial improvements in theregion's working conditions.

The First Undertakings in Bulgaria

Women's groups in Bulgaria were the first to raise theissue of adverse impacts of globalisation and transfor-mation in the context of the garment industry, and atthe same time to use the chances of globalisation in

Principles of External Verficiation by the Fair Wear Foundation(http://www.fairwear.nl):

Labour standards: Eight internationally accepted minimum social stan-dards which are based on ILO Conventions.

Externality or "independence": Implies that multistakeholders are composed ofbusiness, trade union, and NGO representatives.

Supply chain responsibility: Verification along the entire supply chain withoutbeing able to shift the responsibility to suppliers.

Involvement of local stakeholders: Verification and all related operations shall only becarried with the participation of actors in productioncountries.

Development and process approach: The aim of verification is not to encourage buyers'"cut and run" but the improvement of the conditionsin the workplaces of the suppliers. Enforcement ofsocial standards therefore requires a cooperationprocess between the buyer and the supplier.


terms of transnational cooperation. This comes as nosurprise: Bulgaria is, after all, one of the most impor-tant countries for garment manufacturing in the region.

Long-term trust building and investigations by thecoalition of women's groups final bore some fruit,when in October 2001 the initiative achieved its firstsuccess. A seminar was organised that included repre-sentatives from a garment exporters association, statelabour inspectors, trade unions, NGOs, and variousEuropean guests. These initial informative discussionslaid the groundwork for the subsequent reputation ofthe organisers, which became known as the BulgarianEuropean Partnership Association and the BulgarianGender Research Foundation. They have developed aclose co-operative relationship with local trade unio-nists. They try to alert miscellaneous public and stateinstitutions such as the labour inspection agency bypresenting them with their research findings. They areorganizing training sessions, informal discussions, andinternational networking opportunities.

The Road to EU Regulation

In view of the fact that the EU is on the brink of a majorexpansion, the CCC's Eastern European partners areemphasising the adjustments in regulations so thatthey satisfy EU standards. They know that this is of theutmost concern for their governments. The CCC has also tried to find ways to transform theseemingly voluntary character of the codes of conductinto legally binding documents. However, codes of con-duct are binding if they are part of the contract bet-ween the buyer and the supplier, though these obliga-tions are then not part of labour and social law. Stillthe problem remains how corporate social responsibi-lity in times of globalisation can be verified and enfor-ced with legally binding regulations

The CCC participates in conferences organised byvarious EU agencies that discuss the prospect of mul-tinationals acting upon their sense of social responsi-bility by improving the working conditions at theirvarious suppliers. The CCC Partners in the productioncountries have maintained that this level of regulationis preferred over such measures as trade restrictionsor import conditionality, which threaten existing jobsand do nothing to alleviate poor working conditions.

The European Parliament has adopted resolutions thatcalls on multinationals to take the responsibility forenforcing the social standards. The European Commis-sion engaged in a long discussion process on Corpora-te Social Responsibility (CSR). In 2001 it issued aGreen Paper, that the CCC could appreciate because ittook into consideration the established principles ofthe international debate on CSR and Codes of Con-duct, including:1. the complementary relationship between legislati-

on and "soft law" measures like codes of conduct,2. the necessity of including the entire chain of pro-

duction into the scope of application 3. systems of verification, transparency, and reporting 4. the inclusion of new stakeholders into verification

systems. However, the CCC reckons that the Commission placestoo much focus on voluntary approaches. The CCCdoes not believe that voluntary initiatives go farenough to ensure that international labour and humanrights are going to be respected.

The CCC believes that certain aspects have not beengiven enough attention such as the impact of globali-sation on the informalisation of labour, the deteriorati-on of working conditions and the deregulation oflabour markets which undermines national labour


laws and leads to a downward spiral for a large portionof the workforce. Therefore, the CCC has recommen-ded that the EU agencies not only facilitate discussionsbut also actively lead the process toward the imple-mentation of binding regulations. The CCC believesthat the EU should establish clear standards for CSRincluding various indicators and criteria.

In a May 2002 resolution, the European Parliamentcalled for legislation requiring companies to makepublic their annual reports on their social and environ-mental performances in conjunction with their requi-red annual financial reports. This would go a long waytoward making corporate board members more perso-nally responsible for their business practices, andwould help establish jurisdiction against Europeancompanies' abuses in other countries of the world. TheEuropean Parliament also asks for monitoring systemsto take into consideration the experience and know-ledge as gathered by organisations like the European-wide CCC, Social Accountability International, theDutch Fair Wear Foundation, and the British EthicalTrading Initiative.

But, unfortunately, the European Commission has thusfar failed to follow through on this call. It has, in fact,rejected a regulatory approach to corporate social res-ponsibility (CSR) as outlined in its 2002 White Paperon the subject. In fact, the EC has retreated even furt-her by deciding to not require mandatory reporting;supporting instead a "multistakeholder forum on CSR",which will discuss CSR on a voluntary basis.

Regulation within the OECD

The OECD guidelines for multinational companiesrepresent a new tool for requiring CSR. The Guidelinesinclude social standards and one binding requirement- the establishment of National Contact Points inOECD-member countries which are supposed to moni-tor the relevant activities of the various multinationalswith headquarters in the respective country. In manycountries like Germany, these so-called Contact Pointsare located at the Ministry of Economic Afairs. Organi-sations can submit their complaints against multina-tionals at these Contact Points. There have alreadybeen a number of complaints filed against variousmultinationals at some of the established ContactPoints. The CCC, for instance, filed a complaint against

Adidas that had originally been submitted by the Aus-trian CCC and then transferred to the German ContactPoint. The complaint (violations of workers' rights inIndonesia) was accepted and the two sides - the CCCand Adidas - exchanged statements on the issue,which eventually led to Adidas-Salomon agreeing to re-investigate the matter. So far it was achieved that theissue of the living wage standard has been discussedeven though this standard is not included in the OECDguidelines, and that the complaint was brought to thepublic. Still the procedures involved in petitioning theNational Contact Points is cumbersome and requiresintense advocacy efforts on the part of the plaintivesvis a vis the multinationals - reflecting a power imba-lance of the David-versus-Goliath variety. In otherwords, the effectiveness of this tool in improving wor-king conditions remains to be seen.However, the CCC will not sit idly by, it will continue inits efforts to hold multinationals responsible for theimpact of their operations on the lives of its workers.


13. Brief Introduction to the Clean Clothes Campaign (CCC)

Aim: Improving Working Conditions in the global gar-ment industry.

How do we work? European and international networ-king, cooperation, and information exchange. There are CCC coalitions in 11 European countriesinvolving hundreds of women's, human rights, consu-mers rights, development, religious, fair trade/worlds-hop and solidarity organisations, trade unions, andresearch institutes. The CCC has also established linkswith the anti-sweatshop movement in the USA, Cana-da, and Australia.

Scope of activity: Production of garments and sports-wear: cut, make, and trim.

Strategic focus: The main responsibility for inhumaneworking conditions is placed with the retailers, brandname companies, and mail order companies like Kar-stadtQuelle, C&A, Adidas-Salomon, Puma, Marks &Spencer ... By placing orders and realising the profits,they determine the working conditions and ultimatelyhave to be held responsible for these conditions alongtheir entire supply chain.

Main demand: These companies must recognise cer-tain labour standards, implement them, and thenmonitor the implementation themselves. In addition,they must also engage in external verifications of theiroperations with regard to labour norms. This demandhad been agreed upon by CCC-member organisationsand partners in production countries and was formula-ted in the "Code of Labour Practices for the ApparelIndustry Including Sportswear", also known as the CCCcode. Retailers in Sweden, Switzerland, and theNetherlands have already approved this code.

Fields of operation include:

Solidarity actions: The CCC conducts urgent actionsin support of employees in the garment industry anddevelops long-term participatory relationships withlabour-related organisations in production countries; Public awareness raising;Cooperating with willing retailers but also confron-ting resistant retailers; Legal initiatives: The CCC seeks ways to legally claimthe rights of workers along the supply chains of mul-tinationals. It also pursues the rights of consumersto be informed about the conditions under which theclothes they buy are produced.

www.cleanclothes.org


No forced or bondedlabour

(ILO Conventions 29 and 105)

Payment of aliving wage

(ILO Conventions 26and 131 and the Uni-versal Human Rights

Declaration of the UN)

The following 8 labour standards arelargely accepted for the garment sectoras principal rights - and affirmed by Mul-tistakeholder Code Initiatives - the Ethi-cal Trading Initiative, GB, the Fair WearFoundation NL, the SA 8000 Standard,the ICFTU-base code, and in the CleanClothes Campaign's "Code of LabourPractices for the Apparel Industry andSportswear"

No discrimination in employment

(ILO conventions 100 and 111)

Decent working conditions

(ILO Convention 155)

Freedom of association+ the right to collective

bargaining (ILO Conventions 87,

98, 135 and Recommendati-on

143)

Established employment relationship

No child labour - minimum working age

of 15 years. (ILO Conventions

138 and 182)

No excessive working hours -with a maximum 48-hour work-week, overtime maximum of 12

hours per week (ILO Conventions

1 and 47)

Minimum Social Standards

made in eastern europe - clean clothes campaign

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