Commentary: Keep The Heat On Sweatshops

It has been six months since the images of children stitching soccer balls in Pakistan, Haitian workers sewing Walt Disney Co. T-shirts, and Kathie Lee Gifford weeping brought the foreign sweatshop issue squarely into American living rooms. Now, it looks as if some of the U.S. companies accused are starting to take the issue seriously.

On Nov. 22, the World Federation of the Sporting Goods Industry pledged to try to eliminate child labor in their operations worldwide by 2000. In Pakistan, it expects to set up a pilot program for independent monitoring of soccer ball production early next year. Nike Inc. and Reebok International Ltd. are establishing "stitching centers" that aim to deter piece-rate work done by children in homes.

A FIRST. It was the first time a broad group of manufacturers voluntarily agreed to outside monitoring to end labor abuses. A few days earlier, 150 representatives from 50 companies, mostly U.S., met in Hong Kong to discuss everything from improving health and safety conditions to conducting internal audits at overseas contract factories. Sponsored by Business for Social Responsibility, it was the first gathering of its kind in Asia.

So far, so good. Such actions show that business is owning up to the problem. "I think we've turned a corner," says Jeffrey Ballinger, director of Press for Change, a longtime Nike critic. Industry executives agree. "Virtually every large retailer is asking for certification from vendors that they are complying with codes of conduct," says Liv Hustvedt, vice-president of giftware importer Midwest of Cannon Falls Inc.

Let's hope the progress doesn't stop there. Too few executives understand that the clamor for ethical sourcing isn't going to disappear with the wave of a magic press release. They have protested, disingenuously, that conditions at factories run by subcontractors are beyond their control. Even now, many foreign and U.S. managers in Asia convey a condescending sense that workers are lucky to get a job at all. "If you don't have a job, you're a prostitute, a beggar, a thief," one expatriate Nike factory manager in Indonesia told me in July.

Such attitudes won't wash any longer. Like it or not, U.S. and European companies, under fire from consumers and shareholders, are having to lead the way in setting standards for overseas manufacturing. Mostly, they don't like it: Improving conditions costs money and managers' time. Consumers want clothes made in decent factories offering decent pay--but they also want cheap goods. It's hard to give them both.

As the industry gropes for solutions, Nike will be a key company to watch. The world's largest footwear maker long has argued that providing jobs that meet or exceed local standards is contribution enough. But Nike now is stepping up enforcement of a 1993 code of conduct. In October, it set up a labor practices department to monitor its myriad subcontractors. Ernst & Young is finishing audits of Nike's factories, looking for evidence of underage workers or below-minimum pay.

GREED. How far should this go? Low-wage manufacturers likely won't raise pay or cut working hours, even though the added cost would represent a tiny portion of their products' retail price. But Nike is selectively releasing its audit data, while Reebok says it encourages activists to alert it to abuses. Further progress will require more openness to outside scrutiny. Companies, too, must consider broader issues, from the often rapacious methods contractors use to find labor to the food in factory canteens. In Pakistan, soccer ball makers are looking at setting up vocational training programs for the child workers it displaces.

The social justification is clear. Given weak unions and repressive governments in countries such as China, Pakistan, and Indonesia, such efforts may represent the best short-term hope for improving workers' lives. The business case stems from the social one: Brand-driven companies can burnish their image and gain customer loyalty by showing commitment to employees. They lose goodwill by behaving otherwise. Some companies are getting the message. As global commerce--and global activism--intensify the pressure, many more will have to have the lesson hammered home.

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