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

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

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“The phase-out of quotas led to price reductions and strong competition among the poor countries that export clothing and whose national income is heavily dependent on exports.” “The poor countries, competing to retain their clothing industry, try to offer the lowest wages. If, however, one looks at the various cost components from the viewpoint of the buyer/company, wages only account for 0.5-1 percent of the ultimate selling price of the product, as the following chart illustrates. In contrast, marketing and advertising, as well as the profit for the company in Germany/ Europe amount to about 25 percent of the endselling price. An increase in wages is, therefore “peanuts” in the eyes of the buyer.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref><br><br> <br>  
“The phase-out of quotas led to price reductions and strong competition among the poor countries that export clothing and whose national income is heavily dependent on exports.” “The poor countries, competing to retain their clothing industry, try to offer the lowest wages. If, however, one looks at the various cost components from the viewpoint of the buyer/company, wages only account for 0.5-1 percent of the ultimate selling price of the product, as the following chart illustrates. In contrast, marketing and advertising, as well as the profit for the company in Germany/ Europe amount to about 25 percent of the endselling price. An increase in wages is, therefore “peanuts” in the eyes of the buyer.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref><br><br> <br>  


[[Image:Costs.jpg|frame|center|600x300px]]  
[[Image:Costs.jpg|frame|center|600x300px|Costs.jpg]]  


This figure is adapted from the brochure of the CCC.<ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref> “Only around 14 percent (factory and wage costs) remain in the country of production, e.g. Bangladesh.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref>  
This figure is adapted from the brochure of the CCC.<ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref> “Only around 14 percent (factory and wage costs) remain in the country of production, e.g. Bangladesh.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref>  
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<u>1) Cheaper: </u><br>• Prices are dictated, the producer in Bangladesh take such small prices because they otherwise loose the job. “Suppliers are threatened with being removed from the lists, if they do not reduce the price.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16).</ref><br>• Although the costs for energy have raised, the prices for garment still decline. <br><u>2) Quicker: </u><br>• “Collections change more and more frequently: In the past, there was a change twice per year; today, depending on the retailer, such a change can take place up to 12 times per year.”<br>• “Delivery times are becoming shorter and shorter.”<br>• “Today, buyers, with the help of global electronic networking, are able to control the entire value chain. In the internet, contracts are awarded with the help of “online reverse auctions”. Those wishing to make an offer can see what price the others are offering, leading to scandalous underbidding. Interested parties have to act quickly since a contract can be awarded within a few hours. The supplier, therefore, does not have much time to make his calculations.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16)</ref><br><u>2) Risk-shifting:</u><br>• “Suppliers have to adjust to the fact that merchandise, depending on sales levels, can be ordered at short notice. Companies reduce their stock levels to a minimum in order to cut costs. “Quick response” is a form of information technology, which functions as follows: “Once per week, usually on a Sunday after weekend trading, the company sends an order to the supplier, who receives it on Sunday evening. He then has to deliver the goods by Wednesday.” (Abernathy et al 2005). The company not only saves storage capacity, but also passes on all risks to the suppliers (that have costs for the purchase of materials).” <br>• “Suppliers are increasingly being forced to take on more tasks formerly carried out by the textile trader. Thus, more and more suppliers have to buy cloth and yarn and other accessories (buttons, zips, etc.) at their own risk. Buyers are, thereby, able to reduce delivery times and cut costs.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16).</ref><br><br>  
<u>1) Cheaper: </u><br>• Prices are dictated, the producer in Bangladesh take such small prices because they otherwise loose the job. “Suppliers are threatened with being removed from the lists, if they do not reduce the price.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16).</ref><br>• Although the costs for energy have raised, the prices for garment still decline. <br><u>2) Quicker: </u><br>• “Collections change more and more frequently: In the past, there was a change twice per year; today, depending on the retailer, such a change can take place up to 12 times per year.”<br>• “Delivery times are becoming shorter and shorter.”<br>• “Today, buyers, with the help of global electronic networking, are able to control the entire value chain. In the internet, contracts are awarded with the help of “online reverse auctions”. Those wishing to make an offer can see what price the others are offering, leading to scandalous underbidding. Interested parties have to act quickly since a contract can be awarded within a few hours. The supplier, therefore, does not have much time to make his calculations.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16)</ref><br><u>2) Risk-shifting:</u><br>• “Suppliers have to adjust to the fact that merchandise, depending on sales levels, can be ordered at short notice. Companies reduce their stock levels to a minimum in order to cut costs. “Quick response” is a form of information technology, which functions as follows: “Once per week, usually on a Sunday after weekend trading, the company sends an order to the supplier, who receives it on Sunday evening. He then has to deliver the goods by Wednesday.” (Abernathy et al 2005). The company not only saves storage capacity, but also passes on all risks to the suppliers (that have costs for the purchase of materials).” <br>• “Suppliers are increasingly being forced to take on more tasks formerly carried out by the textile trader. Thus, more and more suppliers have to buy cloth and yarn and other accessories (buttons, zips, etc.) at their own risk. Buyers are, thereby, able to reduce delivery times and cut costs.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16).</ref><br><br>  


===== What does KIK do to defend themselves? =====
===== What does KIK do to defend themselve? =====


Stefan Heining (CEO of KIK): “At KiK, the social, ecological and economic added value is very important. This is why today, we take advantage of our strength and size to campaign for the principles of sustainability and to promote continuous improvement. In 2006, we established a strict code of conduct to which all our suppliers are committed. We consequently work on the implementation of the entailed demands. Even though it needs a lot of effort, patience and the ability to take occasional setbacks, our measures in regards to social responsibility serve as role models in the discount domain and help to impose standards. We have begun to optimise our business activities in line with ecological aspects and we will continue to do so in the future.” <ref>Published in CSR brochure of KIK, October 2010. Available from: http://www.kik-textilien.com/uploads/media/CSR-Broschuere_eng.pdf (p. 3).</ref>
Stefan Heining (CEO of KIK): “At KiK, the social, ecological and economic added value is very important. This is why today, we take advantage of our strength and size to campaign for the principles of sustainability and to promote continuous improvement. In 2006, we established a strict code of conduct to which all our suppliers are committed. We consequently work on the implementation of the entailed demands. Even though it needs a lot of effort, patience and the ability to take occasional setbacks, our measures in regards to social responsibility serve as role models in the discount domain and help to impose standards. We have begun to optimise our business activities in line with ecological aspects and we will continue to do so in the future.” <ref>Published in CSR brochure of KIK, October 2010. Available from: http://www.kik-textilien.com/uploads/media/CSR-Broschuere_eng.pdf (p. 3).</ref>  


Code of conduct of KIK: “ 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. According to the ILO convention on the protection of the children (No.138) the bottom age limit of employees is set at the age of 15 and in exceptional cases at the age of 14. This rule is part of the code of conduct of KiK.” “The nine main points of our code of conduct: working atmosphere, working hours, payment, employment conditions, health and safety at work, no forced labour, prohibition of child labour, no discrimination, freedom of association.“<ref>Published in CSR brochure of KIK, October 2010. Available from: http://www.kik-textilien.com/uploads/media/CSR-Broschuere_eng.pdf (p. 6).</ref>  
Code of conduct of KIK: “ 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. According to the ILO convention on the protection of the children (No.138) the bottom age limit of employees is set at the age of 15 and in exceptional cases at the age of 14. This rule is part of the code of conduct of KiK.” “The nine main points of our code of conduct: working atmosphere, working hours, payment, employment conditions, health and safety at work, no forced labour, prohibition of child labour, no discrimination, freedom of association.“<ref>Published in CSR brochure of KIK, October 2010. Available from: http://www.kik-textilien.com/uploads/media/CSR-Broschuere_eng.pdf (p. 6).</ref>  


<br>
==== Bangladesh – Labour Standards  ====
The labour standards at Bangladesh in the factories of the suppliers of KIK are very poor. The people aren’t allowed to join/build up a labour union. The sewers have to work regularly overtime, because they need to fulfil daily goals. The working time is 9-14 hours a day, which makes 80-100 hours a week. To work overtime is not optional. The workers lose their jobs when they do not work overtime. They have to work 6 or 7 days a week. Payment isn’t based on transparent criteria. Date of payment is too late (middle till end of following month). Overtime isn’t paid transparently, too. The workers don’t have a contract of labour and don’t get an overview on their working hours and the resulting payment. 85&nbsp;% women are working at the factories. They are suffering from the discrimination caused by the headmen. Health, hygiene and safety requirements are really bad. In most cases there is no drinking water available and factory canteen or day-care facilities for children are only in use when the auditor comes for a visit. <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 38).</ref>
<br>


==== Code of conduct - Usefulness? ====


=== Bangladesh – Labour Standards ===
The research study in 2008 by Khorshed Alam (AMRF, Alternative Movement for Resources an Freedom Society) shows that voluntary conducts aren’t useful. He was a second time interviewed by the journalist Christoph Lütgert („Panorama -- die Reporter" of the TV-channel ARD) in 2010 and he affirms his former statement that little has changed since the code of conduct has been proclaimed. Audits were made, but only at “good” factories or with well-prepared workers that were forced to say all is really nice in the factory. Sometimes auditors are even tricked.


The labour standards at Bangladesh in the factories of the suppliers of KIK are very poor. The people aren’t allowed to join/build up a labour union. The sewers have to work regularly overtime, because they need to fulfil daily goals. The working time is 9-14 hours a day, which makes 80-100 hours a week. To work overtime is not optional. The workers lose their jobs when they do not work overtime. They have to work 6 or 7 days a week. Payment isn’t based on transparent criteria. Date of payment is too late (middle till end of following month). Overtime isn’t paid transparently, too. The workers don’t have a contract of labour and don’t get an overview on their working hours and the resulting payment. 85 % women are working at the factories. They are suffering from the discrimination caused by the headmen. Health, hygiene and safety requirements are really bad. In most cases there is no drinking water available and factory canteen or day-care facilities for children are only in use when the auditor comes for a visit. <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 38).</ref>
“The interviews with the workers established that there are massive violations against internationally accepted standards.“<ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 37).</ref>  


“Nearly all the interviewed workers had never heard the term, Code of Conduct. However, they are aware that companies, buyers and auditors visit the factory and sometimes want to speak to the workers. During these visits, the factory owners put on a show. Toilets are cleaned. The workers are forced to declare that there is no child labour in their factory, that the working atmosphere is good and that their wages are paid on time. They should also say that they are entitled to take regular holidays, are not forced to work overtime and do not have to work at night. When questioned about their pay, they should say they earn more than they actually do. Workers who are very young or look too young are forced to stay away from work when buyers or auditors visit. In the case of unannounced visits, they are locked in the toilets. There are known cases of workers presenting the real situation to buyers and consequently being dismissed for doing so.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 45).</ref>


==== <br>Outlook ====


<br><br>
In this final part I like to show what can be possible strategies for the future, for example powerful conducts.
 
===== Labour conducts =====
 
A possibility is the proposed code of conduct of the clean clothes campaign (CCC), that orientates at the core labour standards of the ILO: “The following social standards are based on the conventions adopted by the International Labour Organisation (ILO) (the first four belong to the so-called core labour standards) and the universal declaration of human rights: the prohibition of forced labour, discrimination, the employment of children under 15 years of age, freedom of association, restriction on the number of working hours per week to 48 hours and a maximum of 12 hours of voluntary overtime, the right to a living wage, the employment relationship is stable and contractually regulated and best possible occupational safety and health protection.”<ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 77).</ref>
 
The CorA Network wants to install binding political instruments that are supported and controlled by democratic states or unions that do have already established labour rights in their countries: “The CorA Network wants to increase social debate on economic and political actions and to work for binding political instruments, through which the companies are obliged to respect human rights as well as internationally recognised social and ecological norms. The CorA Network is convinced that the road to binding, internationally effective company regulations is not only ethically necessary, but also urgently required for the benefit of all. Binding agreements can be achieved through a combination of instruments, particularly through financial instruments, through limits, through incentive and sanction systems, through State rules and regulations …”<ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 68).</ref>
 
“For a globally effective programme framework, we need a strong international community of democratic states with the ability to take action. The impact of binding regulations with respect to transnationally operating companies can develop better, when as many states as possible – e.g. in the EU, OECD and the United Nations – take co-ordinated action to achieve these goals.”<ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 68)</ref>
 
 
 
==== Potential research questions ====
 
- “The little price” of the textile discounter KIK - consequences for labour conditions at textile factories in Bangladesh. (Who is paying for it at last?; How KIK manages to sell clothes very cheap?)<br>- Which influences has the market power of a discounter on the prices of production in a global market?<br>- Are voluntary negotiated agreements useful?
 
 
 
==== My next steps for developing the case study to a final version ====
 
I have to rewrite the case study and show my own arguments that can be supported by some quotes. I need to include other resources on this subject that support the already mentioned ones and give some theoretical background information.
 
<br>  


=== References<br>  ===
=== References<br>  ===


<references /><br>  
<references /><br>  


=== Literature review<br>  ===
=== Literature review<br>  ===
Reibe
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