Phasing out of MFA and its Impact on Workers. 1Background.

Phasing out of MFA and its Impact on Workers

1 Background

3

Better Factories

• What is it? • Anyone heard of it?

5 mins brainstorm

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Cambodia• 13 million people• 260 000 workers• 80% of Cambodia’s exports• 230 factories• 70% owned by Chinese speakers• 70% exports to US• Per capita income is US$27 per month• Average garment wage = US$72 per month• Directly supporting 1 million people• 30 – 50% salary sent home to family

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Objective

• Increased firm level compliance with Cambodian and international labour law

= better working conditions for workers

= reduce poverty= win:win:win:win

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Background• 1999 US Cambodian Trade Agreement• Quota access for compliance• Possible 18% increase • ILO executing agency to monitor and

report• Project January 2001• USDOL funding, GMAC, Govt• Govt links export license to registration

with the project

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Discussion point

• Why do you think that the project was controversial when it started?

Descriptionoverview

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Remediation cycle

Monitoring

Suggestions

Capacity Building

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Role of unions

• Members of PAC• Mainstreaming social dialogue• Monitoring• Training• Resources• Direct support

Videodiscussion point•List things you want to know or discuss

MonitoringHow it works

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Monitoring

• 6 teams • unannounced visits• Agreed checklist over 500 items• interviews management, workers

and unions• Falsification checking

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Discussion point

• Contact with auditing firms?• Do they talk with union leaders?• Impressions?

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Monitoring reports

• 15 synthesis reports • Each factory given a report • Buyers can request reports• Monitoring plus• Factories named• independent, transparent and

credible

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Key aspects of the labour law

• Handout – see fact sheet about the industry

• Discussion point – how does this compare to factories in your country?

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Key findings

• Handout 1• Discussion point – how does this

compare to factories in your country?

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Supplementary research

• Harassment• Personal security• Health and OSH• Breastfeeding• Dispute resolution

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World Bank Survey of Buyers on Labour Standards• #1 for deciding to source from a country• Cambodia #1 compared to competitors• 60% - labour standards equal or more

important that price, quality and lead times

• 86% - moderate to critical importance to consumers in the future

• ILO monitoring highly credible• See fact sheet

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Post quota

• See fact sheet• Still early days• Buyers consolidating• Price, quality, lead times and

compliance

Trainingapproach

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Role of unions

• Training reference group• Joint training• Offer separate support to unions• Tri-partite delivery in some training• Mainstream social dialogue

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All Better Factories Cambodia training is:

• Usually joint management and union

• Adult-centered • Action-based• Conducted in a safe and supportive

environment• Multi-lingual (depending on target

group)

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Different levels

• Modular training• Single issues• Induction training• Factory based training

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Modular• 20 factories• 7 modules (Globalization, Workplace

Cooperation, Quality, OSH, Productivity, HR and continuous improvement)

• PICC• Factory action plans• 2 plus one training• Document

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Outcomes of trial

• Case Study• Currently tracking indicators

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Output

350000500000

0

200000

400000

600000

Before(per month) Now(per month)

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Working Hour

312

260

200

250

300

350

Before(per month) Now(per month)

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Worker's Salary

60

70

5560657075

Before(per month) Now(per month)

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Workers dimission

6%

2%

0%2%4%6%8%

Before(per month) Now(per month)

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Buyers

2

6

0

5

10

Before Now

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Single issues

• Modules offered separately• Working time• Induction training skills• First aid• Sexual harassment

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Kit for HR managers

• 15 minute video• Comic books• Training kit• Train HR managers

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Factory Based Training

• Targeted to young women with low literacy

• Soap opera style• Supported by comic books• Tri-partite delivery• Show on TV

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Discussion point

• Positives and negatives of joint management/union training

• Does training mean changed behavior?

Pairs and report back

ResourcesMaking them available

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Guide to the labour law

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Website

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Good Practice Sheet

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Newsletter

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OSH Manual

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Industry Post MFA Strategy

• Market niche of good labour standards• Reduce corruption• Trade facilitation• Improve business environment• Improve quality and productivity• Improve skill levels• Increase Khmer management expertise

Labour standards is not enough

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Project strategy

• Refocusing to providing info to international buyers to inform sourcing decisions

• Increased emphasis on remediation• Reducing duplication of monitoring• Building business case• Self sufficient national organization

by 2009

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Information Management System

• presentation

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Agreed Sustainability Strategy

2004 2005 2007 20082006 2009

Current

transition

handover

2010

Lessons LearntEngaging with CSR

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Industry…

What matters is:• Price• Quality• Lead times• Compliance with labour standards• Innovation and whole service

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Context

• Improving working conditions key to pro-poor development

• CSR and monitoring will grow• Monitoring is not enough• Must support freedom to organize

and collectively bargain

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Buyers

• Engagement of buyers is critical• Not all buyers are the same• Important leverage point• Quality of buyer audits and

engagement varies• Risks involved

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Progam design• Independent, credible and transparent• Strong government and buyer support • Use local staff• Mainstream social dialogue• Incentives and enforcement• National or geographical approach• Tri-partite approach• Reduce duplication of monitoring• Engage with buyers and other stakeholders• Emphasis on training and improvement• Consider language

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Challenges• Claiming too much• Monitor up to the factory gate• Corruption• Good governance and rule of law• Lack of tolerance of opposition• Freedom of press• Union corruption and division

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….it is not a panacea