January 20, 2018
06.27.2011 - 12:25PM
Corporate Social Responsibility
By Francesca Rheannon
WikiLeaks revelations aren't just about politics but also about how well corporate practices conform to stated CSR goals.
The news broke several weeks ago the suppliers of several major U.S. apparel companies had convinced the Obama Administration to kill a plan by the Haitian Parliament to raise the country's minimum wage.
According to U.S. State Department cables furnished by WikiLeaks to the Haitian weekly, Haïti Liberté and reported on by The Nation, contractors for Levi-Strauss, Fruit of the Loom and Hanes "worked in close concert with the U.S. Embassy when they aggressively moved to block a minimum wage increase for Haitian assembly zone workers, the lowest-paid in the hemisphere."
Haitian lawmakers passed an increase in the minimum wage to 62 cents per hour in June of 2009. But the factory owners refused to go along, limiting the wages instead to 31 cents per hour, an increase of nine cents. To back them up, they recruited the heavy-handed support of the U.S. State Department, which pressured then Haitian President René Préval to get the Parliament to step back from the wage increase.
It seems to have worked. The minimum daily wage for Haitian workers in the textile industry was set at about $3 a day, while workers in other sectors were entitled to $5 a day. Moreover, as Cathy Feingold, Director of International Affairs for the AFL-CIO, told CSRwire, workers are working on a piece-rate basis, so they have to work at a very high intensity in order to make that minimum -- something the ILO has condemned. (The U.S. Embassy complained the $5 per day minimum for non-textile workers "did not take economic reality into account.")
Not that either wage is able to support a family in Haiti, where food prices have been skyrocketing. In January of 2010, a small bag of rice cost $3.50, more than the entire daily wage of a Haitian textile worker. The Nation cited a 2008 report finding that it would take $12.50 a day to support basic living expenses for a Haitian family.
Ryan Chittum takes a look at that "economic reality" for the textile companies. As he wrote in the Columbia Journalism Review:
Let's do a little math. Haiti has about 25,000 garment workers. If you paid each of them $2 a day more, it would cost their employers $50,000 per working day, or about $12.5 million a year.
Zooming in on specific companies helps clarify this even more. As of last year Hanes had 3,200 Haitians making t-shirts for it. Paying each of them two bucks a day more would cost it about $1.6 million a year. Hanesbrands Incorporated made $211 million on $4.3 billion in sales last year, and presumably it would pass on at least some of its higher labor costs to consumers.
Or better yet, Hanesbrands CEO Richard Noll could forego some of his rich compensation package. He made $10 million package last year. He could pay for the raises for those 3,200 t-shirt makers with just one-sixth of the $10 million in salary and bonus he raked in last year.
If I were the CSR officer (or head of corporate communications) for Hanesbrands, I'd be going "ouch!" upon reading that statement. And Levi Strauss & Co., which has a robust reputation for CSR, came back swinging. The company "vehemently denied" the allegations in a statement released on its website, saying:
"Levi Strauss & Co. did not lobby the Haitian government against raising the minimum wage -- nor did we ask anyone to do so on our behalf. Upon learning of the allegations, we immediately reached out to our contractor in Haiti. Its management has assured us the reports are inaccurate and that the vendor did not lobby against raising the minimum wage."
It wasn't long before the Haiti WikiLeaks flap erupted that my employer, CSRwire, published a press release from Levi-Strauss that turned out to be pertinent to the issue of workers' welfare. Titled, "Levi Strauss & Co. Announces New Terms of Engagement for Its Global Supply Chain; Company CEO Insists We Must Partner with Factories to Empower Workers," the release laid out the company's plan to "move beyond compliance" to "help make employees' lives better by supporting programs for their workers that align with UN Millennium Development goals."
Among the UN Millenium Development goals are to eradicate extreme poverty and hunger, in part by achieving decent work for all. (Another goal is to halve the "proportion of people whose income is less than $1 day” by 2015, but in light of food and fuel inflation – and the statistics about what constitutes a living wage in Haiti and other poor countries -- that goal is revealed as being pitifully inadequate.)
Levi Strauss CEO announced the program at the CERES annual conference. Read from the classic CSR standpoint, it is exemplary. And, as I noted above, Levi-Strauss itself has a stellar reputation as a responsible corporate actor.
In a phone call to the company to get comment on the WikiLeaks-Haiti allegations, this reporter was told, after going through the State Department cables themselves, in addition to talking with the supplier, Grupo M, Levi Strauss didn't have "any evidence that our supplier did anything wrong." Moreover, I was told, Grupo M is "the only supplier in the Haitian textile industry with a collective bargaining agreement; the company has been paying much higher than the minimum wage for years."
Whether or not the other companies mentioned by The Nation, Hanesbrands and Fruit of the Loom, can claim the same innocence as Levi Strauss in the affair -- a Google search did not turn up responses from those companies -- it seems that Levi Strauss has taken seriously its responsibility to do due diligence and ensure accountability in this particular case.
But, as the Levi Strauss representative told me, "There will always be problems in the supply chain, but the more important thing is not only to address the problems but to invest in the long term infrastructure that will give workers tools to improve their lives."
Exactly. But what does that mean? The company pledges its commitment to "empowering workers" to help that happen. It names educating workers on financial literacy, HIV-AIDS, maternal health and a host of other important concerns.
But equally important will be making sure that workers are empowered on the factory floor, to ensure not only that the robust health and safety standards Levi Strauss requires are followed, and also wages and benefits are raised to a truly sustainable standard for workers.
While the union workers who produce the goods for Levi Strauss are making better wages than most other textile workers in Haiti, are their wages high enough to provide a decent living standard in a country where health care and education are privatized -- and expensive? Where food prices are going through the roof?
Cathy Feingold told me Levi Strauss has been "a model in Haiti," but the wages paid to the workers employed by Grupo M are still "low." In fact, a report just released by the AFL-CIO showed it would now take $29 a day to provide a living wage for a Haitian family.
In the Age of WikiLeaks, it will take due diligence and forward thinking -- "going beyond compliance," as Levi Strauss & Co. put it -- to keep a company's CSR reputation from becoming sullied. It will take real worker empowerment and a commitment to ESG standards that can ensure true sustainability for every worker, their family and their community.
About Francesca Rheannon
Francesca is CSRwire's Talkback Managing Editor. An award-winning journalist, Francesca is co-founder of Sea Change Media. She produces the Sea Change Radio's series, Back to The Future, and co-produces the Interfaith Center of Corporate Responsibility's podcast, The Arc of Change. Francesca's work has appeared at SocialFunds.com, The CRO and E Magazine, and she is a contributing writer for CSRwire. Francesca hosts the nationally syndicated radio show, Writers Voice with Francesca Rheannon.
This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.
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