Evaluating Ethical Workplace Standards: Corporate and Public Sector Workwear from Karachi, Pakistan Dr Alex Hughes and Dr Kanchana N. Ruwanpura

Outline  Ethical trade in supply chains for health sector  Aims and scope of study in Karachi, Pakistan  Codes, standards and initiatives implemented by the supplier in Karachi  Implementation of ETI (Ethical Trading Initiative) Base Code: successes and challenges  Areas for further work: recommendations to supplier

Ethical trade in supply chains for health sector  Long-standing academic, media and public attention to ethical sourcing  Recent attention to public (including health) sector  Media attention  Ethical Procurement for Health (EPH) workbook  ETI (Ethical Trading Initiative) training courses  NHS Sustainable Procurement Forum

Aims and scope of study in Karachi, Pakistan  Production of uniforms for UK’s health sector workers  Scoping study 5 th -8 th December 2012  Collaboration with UK-based work-wear supplier, Dimensions, and Universities of Newcastle and Southampton  Study aimed to evaluate the effectiveness of ethical trading codes applied to a first-tier manufacturing supplier of uniforms in Pakistan

The first-tier supplier and Karachi-based factories  Total sales turnover of first-tier supplier: USD 350 million  7 factories in gloves division and 3 factories in clothing division  3 clothing production facilities in Karachi produce wide range of workwear for European clients including uniforms worn in the UK’s NHS  3 clothing factories in Karachi  ‘Factory A’ based in the Export Processing Zone (EPZ)  ‘Factory B’ in Karangi (outside the EPZ)  ‘Factory C’ in North Nazimabad

Study objectives  Objective 1: To establish which ethical codes/standards/initiatives are used by this supplier.  Objective 2: To evaluate the ways in which the ETI Base Code, as the code covering labour standards in the supplier’s factories, is implemented.  Limitation: Interviews with management only

Codes, standards and initiatives implemented by the supplier  Supplier group compliant with ISO 9001:2008 (achieved against backdrop of developments to improve production efficiencies (lean implementation)  Materials suppliers accredited against same Quality Management Systems standard & ISO 14001:2004 for Environmental Management Systems  Oeko-Tex Standard 100 certificates held by fabrics suppliers  Group’s factories work with numerous environmental, health and safety initiatives

Implementation of labour standards  Supplying group signed up to ETI Base Code and SEDEX (the Supplier Ethical Data Exchange)  2011 and 2012 audits and compliance (STR and SERCURA)  2 other significant programmes of corporate social responsibilty affecting workplace standards:  ILO pilot project for Promoting Gender Equality for Decent Employment  United Nations Development Programme (UNDP) GEN- PROM project on Gender Promotion in the Garment/Clothing Sector through Skill Development (supplier participating since its inception in 2007)

Ethical Trading Initiative  ETI BASE CODE  1. Employment is freely chosen  2. Freedom of association and the right to collective bargaining are respected  3. Working conditions are safe and hygienic  4. Child labour should not be used  5. Living wages are paid  6. Working hours are not excessive  7. No discrimination is practised  8. Regular employment is provided  9. No harsh or inhumane treatment is allowed

Implementation of ETI Base Code: successes and challenges 1. Employment is freely chosen - Management said that documentation collected for employment purposes is returned to the worker with only photocopies of relevant formal documents kept with the company. Workers have freedom to leave employment at his/her discretion, ideally with the formal period of notice given. 2. Freedom of association and right to collective bargaining respected - Weakly upheld globally - Union activity prohibited in EPZ - Worker Councils meet every 3 months (low no. of worker reps and ad hoc selection, 1 woman on the council – even though women workers are the majority and active recruitment of women is a stated goal for the company) - Room to raise more awareness of workers’ rights with respect to ETI Base Code

Implementation of ETI Base Code (cont.) 3. Working conditions are safe and hygienic - Against the backdrop of factory fires, these suppliers have taken important strides to emphasize this code to workers. - However, EPZ-regulations permit factories for vertical expansion without building planning permission. Potential hazard as fire exits were not followed. 4. Child labour should not be used - Policy of hiring workers at no less than years or older is best to aspire to. Inconsistencies in Pakistan labour laws offer possible loopholes for evasion of global concerns around the non- use of child labour.

Implementation of ETI Base Code (cont.) 5. Living wages are paid - Monthly salaries (PKRs 8,100 to PKRs 10,600) meet minimum wages set by Pakistani authorities, but do not meet living wage aspirations of the ETI Base Code - Pakistan Institute of Labour Education & Research (PILER) in 2009 and in relation to the Asia Floor Wage campaign estimated the living wage for Pakistani workers to be at PKRs 12, Working hours are not excessive - No work after 5.00 pm, and it appeared that workers clocked off at the noted time - Yet, discrepancies in management accounts suggest that overtime may in fact be in use. While overtime is permitted according to Pakistani labour law and similar allowances are made by the ETI Base Code (up to 12 hours per week), the need to pay workers for overtime was emphasized in our feedback to them.

Implementation of ETI Base Code (cont.) 7. No discrimination is practised - Non-discriminatory practices according to the ETI Base Code are defined as “no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership or political affiliation” - UNDP’s GEN-PROM programme: efforts to recruit, train and upgrade skills of women - But, growing unemployment amongst men prompting UNDP to review its programmes and to include male workers

Implementation of ETI Base Code (cont.) 8. Regular employment is provided - Regular employment provided to workers following required laws with regard to this clause. Usually it was the workers who left their workplaces with inadequate notice given or because of unexpected social problems. 9. No harsh or inhumane treatment is allowed - During our short visits to the 3 factories, no visible problems. - Managers emphasized need for positive work context and placed emphasis on affirmative working relationships. - Leads to a positive image for supplier’s ability to recruit workers, i.e. workers come looking for work because of its standing as a reputable employer.

Areas for further work: recommendations to supplier 1) Management focus much more on quality and environmental issues than labour. Suggest balance between all areas. 2) Variation in management awareness of labour laws. Knowledge could be checked and improved. 3) Scope to develop initiatives for raising worker awareness of labour codes and rights and responsibilities in workplace. Images or cartoons can be used to enhance worker awareness, so that workers – irrespective of their literacy levels – are made aware of workplace rights.

Areas for further work: recommendations to supplier (cont.) 4) Feedback boxes should be located in places easily accessible to workers away from management supervision, such as a canteen area, locker spaces, outside of production floor, etc.—with culturally- sensitive images. Workers should be encouraged to offer feedback. Even where worker feedback may not be offered in a constructive spirit, management should be trained to listen and respond to workers. 5) Composition and meeting frequency of, and selection procedures for, Worker Councils could be improved. The company should consider monthly, rather than quarterly, meetings as well as consider larger worker representation in the Councils.

Areas for further work: recommendations to supplier (cont.) 6) Continue collaboration with UNDP. GEN-PROM programme a success and played vital role in skills upgrading & empowerment of women workers. UNDP work evolving rapidly and entering new stages. It recognizes balance between women workers’ increased participation in the workplace and it not becoming a tool for discriminating against men seeking similar employment. 7) Room to consider more engagement with NGOs (e.g. PILER) to improve areas such as payment of living wage & effectiveness of Worker Councils. European buyers increasingly emphasise the value of input from local NGOs in supporting developments in workplace standards.