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“The Low Price” of the textile discounter KiK – consequences for labour conditions in textile factories in Bangladesh: Difference between revisions

“The Low Price” of the textile discounter KiK – consequences for labour conditions in textile factories in Bangladesh (view source)

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===== <u>3.2.1 How discounter determine the prices</u>  =====
===== <u>3.2.1 How discounter determine the prices</u>  =====


Why can discounter sell their products for such little prices? As you can read on the KiK homepage their basis business model is to order a big number of pieces from each product and deliver them with an intelligent logistic system to their stores. It is important to plan an attractive product-range and be flexible enough to order quickly new products when they have sold-out.<ref name="B" /> The production of demanded clothes needs to be a “Just-in-Time” production, because this system allows a maximum of flexibility and very little costs for storage.<ref>Globalisierung. Author: PD Dr. Norman Backhaus. Published by Prof. Dr. Rainer Duttmann, Prof. Dr. Rainer Glawion, Prof. Herbert Popp, Prof. Dr. Rita Schneider-Sliwa. Published in Westermann Bildungshaus Schulbuchverlage, Braunschweig 2009, page 167.</ref>  
Why can discounter sell their products for such little prices? As you can read on the KiK homepage their basic business model is to order a big number of pieces from each product and deliver them with an intelligent logistic system to their stores. It is important to plan an attractive product-range and be flexible enough to order quickly new products when they have sold-out.<ref name="B" /> The production of demanded clothes needs to be a “Just-in-Time” production, because this system allows a maximum of flexibility and very little costs for storage.<ref>Globalisierung. Author: PD Dr. Norman Backhaus. Published by Prof. Dr. Rainer Duttmann, Prof. Dr. Rainer Glawion, Prof. Herbert Popp, Prof. Dr. Rita Schneider-Sliwa. Published in Westermann Bildungshaus Schulbuchverlage, Braunschweig 2009, page 167.</ref>  


The big volume orders have both advantages and disadvantages for the textile producers at Bangladesh. As an advantage you can name that the factories are working to full capacity. This is under the economic point of view a status that one should aspire. The workers have jobs and are paid. The problem is that such factories depend on only one huge client. If this client decides to search for a new producer the whole factory is without an order. That means the machines stand still and the workers are dismissed. The factory owner won’t have enough money to pay his bills like rental fee or electricity costs. If he doesn’t get a new order he will soon be bankrupt. So, the dependence to one client is a clear disadvantage for the producers. The big client uses his power to keep the prices down. “The largest discounters pay their suppliers up to 15-20 percent less for their goods than normal department stores (ActionAid, 2007, p. 16).”<ref name="A" /> The consequence of steadily decreasing prices is the decreasing of the already low wages of the garment workers. <br>  
The big volume orders have both advantages and disadvantages for the textile producers at Bangladesh. As an advantage you can name that the factories are working to full capacity. This is under the economic point of view a status that one should aspire. The workers have jobs and are paid. The problem is that such factories depend on only one huge client. If this client decides to search for a new producer the whole factory is without an order. That means the machines stand still and the workers are dismissed. The factory owner won’t have enough money to pay his bills like rental fee or electricity costs. If he doesn’t get a new order he will soon be bankrupt. So, the dependence to one client is a clear disadvantage for the producers. The big client uses his power to keep the prices down. “The largest discounters pay their suppliers up to 15-20 percent less for their goods than normal department stores (ActionAid, 2007, p. 16).”<ref name="A" /> The consequence of steadily decreasing prices is the decreasing of the already low wages of the garment workers. <br>  
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This statement is very important because KiK sets his own levelling board they must achieve or otherwise can get criticised for. As a next step it is necessary to take a closer look to the established code of conduct by KiK in 2006. The code of conduct describes social standards for all trading partners of KiK, including those in Bangladesh and China. “The regulations of the code of conduct contain all the usual conventions of the International Labour Organisation (ILO) for good working conditions. These include adhering to maximum working hours and paying a minimum wage as well as a safe and clean working environment, freedom of assembly and collective bargaining and the prohibition of child labour.”<ref name="C" />  
This statement is very important because KiK sets his own levelling board they must achieve or otherwise can get criticised for. As a next step it is necessary to take a closer look to the established code of conduct by KiK in 2006. The code of conduct describes social standards for all trading partners of KiK, including those in Bangladesh and China. “The regulations of the code of conduct contain all the usual conventions of the International Labour Organisation (ILO) for good working conditions. These include adhering to maximum working hours and paying a minimum wage as well as a safe and clean working environment, freedom of assembly and collective bargaining and the prohibition of child labour.”<ref name="C" />  
===== 3.3.1 "Control mechanism" during a social audit =====


The adherence of the code of conduct rules is controlled systematically by inspections that are carried out by independent audit organisations. These social audits do follow a schedule plan that is showed in figure 2.<br>  
The adherence of the code of conduct rules is controlled systematically by inspections that are carried out by independent audit organisations. These social audits do follow a schedule plan that is showed in figure 2.<br>  
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The auditor arrives at the factory unannounced and starts his audit by talking to the management and asking for some documents. Then he inspects the whole factory with regard of working conditions, safety aspects and health requirements. He also chooses workers for a later interview. These interviews are carried out in absence of the authorities of the factory.<ref name="C" /> “This means that they can find out whether the maximum working hours are adhered to and whether their monthly wages, including overtime, are paid correctly.”<ref name="C" /> After this the auditor evaluates the factory and talks to the management about lacking standards and a suitable procedure to reach the conduct wished state. The audit report is send to the KiK home-office. After a while a re-audit takes place where all criticised points are under examination again.  
The auditor arrives at the factory unannounced and starts his audit by talking to the management and asking for some documents. Then he inspects the whole factory with regard of working conditions, safety aspects and health requirements. He also chooses workers for a later interview. These interviews are carried out in absence of the authorities of the factory.<ref name="C" /> “This means that they can find out whether the maximum working hours are adhered to and whether their monthly wages, including overtime, are paid correctly.”<ref name="C" /> After this the auditor evaluates the factory and talks to the management about lacking standards and a suitable procedure to reach the conduct wished state. The audit report is send to the KiK home-office. After a while a re-audit takes place where all criticised points are under examination again.  


This last paragraph describes the way an audit should be and if it functions this way, it is definitely a good instrument to control the code of conduct. The next chapter is based on a research study in 2008 conducted by the society of “Alternative Movement for Resources and Freedom” (AMRF), a Bangladeshi NGO, by order of the “Clean Clothes Campaign”. This study was made to reveal the real working conditions in the factories of the suppliers of KiK and Lidl. A team of researchers interviewed 136 workers in six factories. They answered questionnaires and 31 of them were asked in group discussions.<ref name="A" /> Chapter 4 will present the opposite perspective to the announcement of KiK. It shows how the rules and control-audits are tricked and under which conditions the mostly female workers suffer.  
According to the describtion of how an audit should be and if it functions this way, it is definitely a good instrument to control the code of conduct. The next chapter is based on a research study in 2008 conducted by the society of “Alternative Movement for Resources and Freedom” (AMRF), a Bangladeshi NGO, by order of the “Clean Clothes Campaign”. This study was made to reveal the real working conditions in the factories of the suppliers of KiK and Lidl. A team of researchers interviewed 136 workers in six factories. They answered questionnaires and 31 of them were asked in group discussions.<ref name="A" /> Chapter 4 will present the opposite perspective to the announcement of KiK. It shows how the rules and control-audits are tricked and under which conditions the mostly female workers suffer.  


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