99729 INTERWOVEN How the Better Work Program Improves Job and Life Quality in the Apparel Sector © 2015 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, D.C. 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Design: Greg Wlosinski, The World Bank, General Services: Printing & Multimedia Photo credits: Cover photo: Manager checking quality of jeans with workers, Maseru, Lesotho. Photographer Jean-Pierre Pellissier ES, pg. iii: Two workers in front of a factory, Maseru, Lesotho. Photographer Jean-Pierre Pellissier Chapter 1, pg. 1: Worker looking across factory floor, Maseru, Lesotho. Photographer Jean-Pierre Pellissier Chapter 2, pg. 9: Worker sewing a shirt, Bình Dương, Vietnam, Photographer Nguyen Nguyen Nhu Trang Chapter 3, pg. 17: Worker working on jeans, Maseru, Lesotho. Photographer Jean-Pierre Pellissier Chapter 4, pg. 31: Worker speaking with management, Bình Dương, Vietnam, Photographer Nguyen Nguyen Nhu Trang Chapter 5, pg. 55: Workers leaving factory, Maseru, Lesotho. Photographer Jean-Pierre Pellissier Chapter 6, pg. 71: Workers packing products, Vietnam. Bình Dương, Vietnam, Photographer Nguyen Nguyen Nhu Trang Chapter 7, pg. 83: Worker inside a factory, Maseru, Lesotho. Photographer Jean-Pierre Pellissier Workers walking their children to factory kindergarten, Bình Dương, Vietnam, Photographer Nguyen Chapter 8, pg. 91:  Nguyen Nhu Trang Contents About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii The World Needs More—and Better—Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii How the Global Apparel Value Chain Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Better Work: Stakeholders Working Together to Improve Job Quality . . . . . . . . . . . . . . . . . xv Working Conditions Inside Factories: Safer, Healthier, and More Collegial Work Environments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv Beyond Factory Walls: Workers Live Better Lives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvi Moving Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii Chapter 1: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Globalization and Job Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Background of the Apparel Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Better Work: An Innovative Model for Addressing Poor Working Conditions . . . . . . . . . . . . 4 Overview of the Report Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Chapter 2: Apparel Sector Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Who Are Garment Workers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Why Are Most Garment and Textile Workers Women? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 What Does It Mean to Workers to Have “Job Quality”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Chapter 3: The Genesis and Evolution of Better Work . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Genesis of Better Work: The Cambodian Garment Industry and Better Factories Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Better Work Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Why Better Work Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Chapter 4: Improvements in Factory Working Conditions . . . . . . . . . . . . . . . . . . . . . . . 31 Initial Factory Working Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Impacts of Better Work on Working Conditions inside Factories: Evidence from Compliance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 The Better Factories Cambodia Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Beyond Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 A Comparison of Men’s and Women’s Feedback on Changes in Working Conditions . . . . . 49 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 iii iv | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Chapter 5: Improvements in Workers’ Lives Outside Factories . . . . . . . . . . . . . . . . . . 55 Well-Being and Poverty Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Communication Skills and Family Lives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Decision on Children’s Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Gender Equality and Women’s Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Chapter 6: Improvements in Working Conditions and Firm and Industry Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Working Conditions and Firm Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Human Resource Management Policies and Firm Performance . . . . . . . . . . . . . . . . . . . . . . . 73 Evidence from Better Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Chapter 7: Expansion to Other Factories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 In Search of Spillover Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Incentivizing Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Mandating versus Voluntary Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Chapter 8: Policy Implications of the Quest for Better Jobs . . . . . . . . . . . . . . . . . . . . . 91 Conclusions about the Better Work Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Recommendations Moving Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Knowledge Gaps and Suggestions for Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Appendix A: Data Analysis Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Appendix B: Organizations and Initiatives Working to Improve Working Conditions . . . . . . . . . . 109 Appendix C: Methodology for Conducting Qualitative and Quantitative Data Gathering . . . . . . . 113 Appendix D: List of Job Quality Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Appendix E: Baseline Synthesis Report Profiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Appendix F: Application of SWIFT’s Survey-to-Survey Imputation Method to the Better Work Program in Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Appendix G: Gravity Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 iv About the Authors Aphichoke (Andy) Kotikula is a senior economist Raymond Robertson is the Roy and Helen Ryu in the Gender Cross Cutting Solution Area of the Professor of Economics and Government at the World Bank Group, based in Washington, D.C., Bush School of Government and Public Service, and has been in this position since 2013. He Texas A&M University. His research focuses on holds a PhD and MA in economics from Johns the union of international, labor, and develop- Hopkins University, and a bachelor’s degree in ment economics. He has published in American economics from Chulalongkorn University. Previ- Economic Review, Review of Economics and ously, he was a poverty economist for the South Statistics, Journal of International Economics, Asia region. Kotikula has worked on a range of Review of International Economics, Journal issues in the areas of gender equality and poverty of Development Economics, and others. He measurement. serves on the advisory board at the Center for Milad Pournik is a consultant for the Gender Cross Global Development and was a member of the Cutting Solution Area of the World Bank Group. U.S. State Department’s Advisory Committee Previously, he has consulted for Management on International Economic Policy (ACIEP). He Systems International. He also served as research is currently the chair of the U.S. Department of associate with the Global Gender Program at Labor’s National Advisory Committee on Labor George Washington University. Milad has pub- Provisions of Free Trade Agreement (NAC). His lished several papers including on women in peace current work focuses on the effects of the ILO’s and security, women’s political leadership, and Better Work program in Cambodia and other CSOs supporting women. He received a master’s countries, as well as other issues relating to the degree in Global Policy from the LBJ School of effects of globalization on workers. He received his Public Affairs at University of Texas, Austin, and a PhD from the University of Texas after spending master’s in economics and international relations a year in Mexico as a Fulbright scholar. from the University of St. Andrews in Scotland. v Acknowledgements This report is the work of the World Bank Group’s surveys in Cambodia and Vietnam. The Better Gender Cross Cutting Solution Area. The task was Work country offices in Cambodia, Lesotho, led by Aphichoke Kotikula (GCGDR) and Carlos and Vietnam helped facilitate field research and Sobrado (GPVDR). The report was prepared under provided us with valuable contextual information. the guidance of Caren Grown (Senior Director, We want to recognize in particular the support Gender CCSA). The main contributors to the writ- of Esther Germans and Camilla Roman (BFC), ing and analyses are Raymond Robertson (Texas Kristina Kurths (BW Lesotho), Hong Ha Nguyen A&M University) and Milad Pournik (GCGDR). and David Williams (BW Vietnam), and Dan Rees The team is also grateful to several others—Elisa (BW director). Gamberoni (GTCDR), Javier Arias-Vazquez, The team acknowledges Gladys López-Acevedo Tomoyuki Sho, Florencia Paz (GCGDR), Nguyen (SARCE), Thomas Farole (GCJDR), Kim Eliot Viet Cuong (National Economics University, Viet- (CGD), and Arianna Rossi (ILO) for their work nam), Kelly Pike (York University), and Christian in conducting peer reviews; and the World Bank Ferrada (Central Bank of Chile and University of Group staff members and others for useful Chile)—for important contributions to specific review comments and input. Communications sections and analyses. Additional support and coordination has been led by Sarah Jackson-Han comments were provided by Benedicte Leroy (GCGDR) and administrative support has been De  La  Briere, Lucia Hanmer, Maria Soledad provided by Ngozi Kalu-Mba and Mame Fatou Requejo, Jeffrey Daniel Eisenbraun, Amy Luin- Niasse (GCGDR). Funding for this study was stra, Kevin Kolbin, Ros Harvey, and Sarah West. provided by the World Bank-Netherland Partner- We also thank Pisey Khin and Nguyen Nguyen ship Program (BNPP). Nhu Trang (and their teams) for coordinating vii Abbreviations AGOA African Growth and Opportunity IFI International Financial Institution Act ILO International Labour Organization BFC Better Factories Cambodia IMS Information Management System BSR Business for Social Responsibility HRM human resource management (HERproject) LNDC Lesotho National Development BTTA Bilateral Textile Trade Agreement Corporation BW Better Work MCC Millennium Challenge Corporation CCC Clean Clothes Campaign MFA Multi-Fibre Arrangement CP compliance point MI multiple-imputation CPI consumer price index MOLISA Ministry of Labour—Invalids and CSR corporate social responsibility Social Affairs (Vietnam) CSES Cambodia Socio-Economic Survey MNC multinational corporation DOL (U.S.) Department of Labor NGO nongovernmental organization DPF Development Policy Financing OSH occupational safety and health EA enterprise advisor PAC project advisory committee EICC Electronic Industry Citizenship PICC Performance Improvement Coalition Consultative Committee EPZ Export Processing Zone PPE personal protective equipment ETI Ethical Trading Initiative PPP public-private partnership FACB freedom of association and R&D research and development collective bargaining SHRM strategic human resource FDI foreign direct investment management FGD focus group discussion SWIFT Survey of Well-being via Instant and FLA Fair Labor Association Frequent Tracking FTA free trade agreement TFP total-factor productivity FWF Fair Wear Foundation TTWU Tailors and Textile Workers Union GAP Global Action Program on Child TUBWME Tufts University Better Work Labor Issues Monitoring and Evaluation GATT General Agreement on Tariffs UN United Nations and Trade VCCI Vietnam Chamber of Commerce GDP gross domestic product and Industries GMAC Garment Manufacturers’ VGCL Vietnam General Confederation of Association of Cambodia Labour GSCP Global Social Compliance WDR World Development Report Programme WRAP Worldwide Responsible Accredited GTSF Global Trade Supplier Finance Production IFC International Finance Corporation WTO World Trade Organization ix Foreword Our 2013 World Development Report shed new conditions help empower female garment workers light on the transformational role of jobs in rais- in factories and beyond, and whether and how ing living standards, boosting productivity, and improved conditions affect profits. Its findings promoting social cohesion. Jobs, it argued, are are encouraging. Qualitative and quantitative thus “what we earn, what we do, and even who study shows a correlation between better working we are.” At this juncture, the world faces a jobs conditions and improved performance, reduced crisis. More than a billion people of working turnover, and a more robust bottom line. For age—mostly women—are absent from the labor example, Nalt Enterprise, a Better Work factory force, while another 200 million are unemployed, in Vietnam, estimates that it takes up to three most of them young. Some 600 million new jobs months for a new textile worker to reach full are needed by 2030 simply to keep employment productivity—and that a 10 percent reduction rates constant. But as the 2013 WDR made clear, in staff turnover would save 8.5 percent of total not every job helps lift people out of poverty, annual wage costs. Workers also reported a sig- improves wellbeing, and benefits the broader nificant spillover outside factory walls: Trained in community. Not every job raises aspirations along communication, nondiscrimination, and dispute with living standards, spurring meaningful invest- resolution at work, they were better at managing ment in the next generation. Yet what the world stress and overcoming traditional gender biases needs most is “good jobs,” defined by a worker at home—with spouses reporting that they now in this study as “a job that makes me want to go shared not just household chores and responsibili- to work every morning when I wake up.” ties but planning and decision-making as well. Creating more good jobs for millions of pre- Creating more good jobs and tackling persis- dominantly female garment workers in develop- tent gender gaps are development imperatives if ing countries is the mission of Better Work, an we are to achieve our overarching goals: ending IFC-ILO-industry partnership launched in 2001. extreme poverty and boosting shared growth. A While the garment industry often provides a vital progressive, efficient tax system benefits no one first step out of poverty—and an alternative to without jobs to produce revenue and growth, just low-skilled agriculture and service work—it has as public services and state-of-the-art infrastruc- long been associated with low wages, long hours, ture fall short if they are accessible and useful to discrimination, abuse, and a variety of conditions only half the population. This report highlights that put workers’ health and safety at risk. Better important links between better work and better Work trains local monitors to make unannounced lives for women and men, and better, more inclu- inspections and bring factories into compliance sive and sustainable growth. We hope and expect with national laws and international standards it will spur further study and informed action. through auditing and advisory and training ser- vices. As of 2014, according to Better Work, the Nigel Twose, Senior Director, Jobs program had helped improve working conditions for more than 1 million workers in more than Caren Grown, Senior Director, Gender 1,000 factories across eight countries. This study set out to understand how exactly such improvements occur, whether better working xi Executive Summary The World Needs More—and Working in apparel can provide women with greater economic opportunities that enhance their Better—Jobs agency. Therefore, for millions of poor unskilled One of the first steps that many countries have workers, jobs in apparel manufacturing can be a taken in the past hundred years to begin their first step toward escaping poverty. The challenge development process is to produce apparel. The is to improve job quality in the apparel sector apparel sector is labor-intensive, which makes it and thereby increase the chances that these jobs an appealing industry for many countries as they will both advance gender equality and reduce seek to create jobs for their citizens. At the same poverty. Drawing on a wide literature and some time, this is a global industry, and buyers have field studies conducted by our research team, become increasingly concerned about the working we seek to answer three questions: (1) How conditions of apparel workers. The sector has a can working conditions in the apparel sector be reputation for low quality jobs. Low wages, long improved? (2) Do improvements in job quality hours, high temperatures, excessive noise, poor affect gender inequality, improve worker welfare, air quality, unsanitary environments, and abuse and help alleviate poverty? and (3) Do improve- (both verbal and physical) often characterize ments in job quality boost firm performance? working conditions in apparel factories in many developing countries. Despite these risks, the apparel sector has an How the Global Apparel Value unusually high development potential because Chain Works apparel workers tend to be women whose alter- The current structure of the global apparel trade native options for employment are likely to be involves many stakeholders (see Figure ES.1), in the low-skilled agriculture and service sectors. all of whom have some stake in both improving xiii xiv | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector How Workers Describe Job Quality Defining job quality is important but difficult because jobs have many different char- acteristics like pay and working conditions. This study aims to understand how work- ers themselves see the key characteristics that shape job quality. Our field research in four countries (Cambodia, Kenya, Lesotho, and Vietnam) finds that job quality means largely the same thing. Certain economic characteristics such as good pay and benefits are prominent in workers’ minds, but so too are social dimensions such as respectful relations with managers and supervisors and work-life balance (facilitated by having reasonable work hours). Figure ES.1: All stakeholders in the apparel value chain stand to gain from Better Work (BW) • Reliable sourcing • Competitiveness • Reputation • Jobs • Cost e ective audits • Enforcement capacity Buyers Government Workers Factories • Working conditions • Access to markets • Jobs and income • HR management • Gender equality • Productivity gain working conditions in factories and improving working conditions due to concerns about the performance of factories. costs. If, however, such improvements lead • Buyers design products and bring them to to an increase in workers’ productivity, markets. Maximizing profits is their priority management may consider making the criterion when choosing suppliers to produce necessary changes. If the value of worker their products. However, they also consider productivity increases more than the cost of many other factors such as reliability, timeli- the investment aimed at improving working ness, and quality of products. In addition, conditions, then improving working condi- buyers also have an incentive to improve tions can increase factory profits. working conditions in developing countries • Workers have a clear stake in improving when they face reputation risk. working conditions—both improvements • Factory management or producers in in ambient conditions, such as temperature, developing countries may resist improving air quality, and so on, and in workplace Executive Summary | xv communication. Better working conditions unannounced visits and assess working conditions. improve workers’ quality of life and may One of the goals of the Better Work Program is also increase their productivity and learning. to bring the factories into compliance, not only • Governments and the international commu- with national laws, but also with international nity have an incentive to improve working labor standards. BW is unique because its model conditions. Aside from the concern that not only entails auditing, but also advisory and governments might have for their working training services. While different training modules population, governments also benefit by are offered across different BW countries, they attracting foreign investment and boosting all aim to build the capacity of key stakehold- exports. ers to improve working conditions and factory productivity. Starting in 2015, BW is piloting a new operating Better Work: Stakeholders Working model by offering advisory and training services Together to Improve Job Quality prior to carrying out assessments. This change In the past, people have tried to address concerns seeks to foster engagement with factories first about working conditions in a confrontational and to help them initiate reforms prior to the way by pitting producers against workers or pit- formal assessment process. It also should help ting buyers against governments. In this regard, to feature BW’s advisory and training services one of the innovations of the Better Work (BW) more prominently and ensure that BW is known Program is to find common ground where all of as more than simply an auditing exercise. the stakeholders can build upon their common values and goals in order to improve working Working Conditions Inside conditions. The Better Work Program has its roots in Factories: Safer, Healthier, and More the Better Factories Cambodia (BFC) program, Collegial Work Environments established in 2001 as a follow-on from the 1999 Factories in BW programs have seen improvement U.S.-Cambodia Bilateral Trade Agreement. The in working conditions. Over time, BW factories free trade agreement (FTA) was the first to link exhibit improved compliance with key national improved labor conditions with greater market and international standards. These standards access. The BFC program benefitted all the key include safety, fire prevention, protective gears, stakeholders by improving work conditions, accurate compensation, discrimination, and supporting the growth of the apparel sector in so forth. Workers themselves also report that Cambodia (benefitting all local stakeholders), factories are safer. In a follow-up survey after and boosting developed world buyers’ reputa- the introduction of the BW Program in Lesotho, tion by sourcing from ethical workplaces. BFC workers reported occupational health and safety has also helped to cushion the negative effects (OSH) as the area with the most improvement of external changes to the trading environment and attributed such an improvement to changes in the apparel sector (the end of the Multi-Fibre in workers’ awareness and factory policies. In Arrangement quota system in 2005 and the global addition, improved working conditions benefit financial crisis in 2008–09). The program has male and female workers equally. grown substantially; as of December 2014, BW The BW Program promotes behavioral change has reached over a million workers in more than of workers and factory management through 1,000 factories across eight countries (Bangladesh, training and advisory services. The BW advisory Cambodia, Haiti, Indonesia, Jordan, Lesotho, services help to create Performance Improvement Nicaragua, and Vietnam). Consultative Committees (PICCs) in factories. Data from Cambodia, Lesotho, and Vietnam How the Better Work Program Works suggest that the creation of PICCs is particularly The very first step of the Better Work program valuable (see box entitled “New Tool” below). In when it starts working with an apparel factory is terms of training, the workers and managers we the assessment stage. The Better Work program surveyed often expressed how they were able to trains local monitors to go into the factories on use the knowledge gained through BW training xvi | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector New Tool: Performance Improvement Consultative Committees (PICCs) One of the innovations of the BW Program has been the formulation of Performance Improvement Consultative Committees (PICC). PICCs are groups made up of an equal number of both management and union/worker representatives who meet regularly to help resolve disputes within the factory and also try and improve performance of the factory in a collaborative way. In Lesotho, workers can raise their specific health and safety concerns through PICCs, which are heard by union and non-union worker repre- sentatives, management representatives, and an enterprise adviser from Better Work. Success of PICCs: • The PICCs proved to be useful avenues in which to bring up problems, and to resolve them more effectively than previous mechanisms. • The PICCs not only helped improve industrial relations, but also helped to strengthen trade unions overall. • In the case of Vietnam, the success of the PICC model was such that it compelled the government to introduce a new labor code that obligated employers to conduct social dialogue in the workplace. to create safer, healthier, and more collaborative and therefore improve the performance of the work environments. factories. Profits, productivity, and survival all tend to move in a positive direction when work- But Will These Improvements in ing conditions improve as staff turnover and Working Conditions Last? absenteeism decrease. In Vietnam, Better Work factories, which pay higher wages and invested Research in Cambodia suggests that such improve- in improving working conditions and complying ments are sustainable. A more detailed look into with labor standards, have comparable profits to the data shows that (1) once investments are non-BW factories. made to improve work conditions they are rarely The benefits of involvement with the Better reversed; (2) reputation-sensitive buyers make a Work program extend beyond the factory level difference as reflected by the fact that the factories to the country level. In this regard, the impacts on they source from tend to be in greater compliance the economies of apparel-producing countries can with national and international labor standards; be substantial. Comparing export data across the and (3) important limitations still exist and the world, participating in the Better Work program BW program has not proven to be a panacea for is associated with significant increases in apparel all of the garment sector’s problems. exports—both to the world generally and to the Firms Are More Productive United States in particular. This relationship holds true after controlling for relevant factors that may Apparel factories may be hesitant to improve affect apparel trade. working conditions due to the initial investment required. However, research from this study has Beyond Factory Walls: Workers Live shown that improvements in working conditions can actually contribute to factory performance. Better Lives As communication improves, workers and the For workers, the benefits of working in the apparel management are better able to resolve disputes sector in general and to participate in the BW Executive Summary | xvii Program in particular, extend beyond factory men receive equal pay for equal work. In this walls. Participants are gaining lessons from the regard, the use of productivity targets and piece- Better Work experience and training. And they are rate remunerations may help explain the wage taking those lessons back home, improving the equality. Data from Cambodia also suggest that lives of their families as well. In Lesotho, workers women earn more, but accumulate less wealth. often attributed BW training in financial literacy In Cambodia, on average, women earn more to improving their lives. Workers from Cambodia, than men; this difference can be explained in Vietnam, and Lesotho reported that improved part by the fact that women tend to work longer communication at home and decreased stress hours than men (56 versus 54 hours per week). levels at work have contributed to their higher However, female workers do not appear to own level of satisfaction with their family lives. Better more assets. This may be explained by the fact communication in the households also enables that female workers often mention using extra families to make better decisions. In Cambodia, money to support relatives or children’s education. children whose mothers work in the apparel sec- tor are more likely to attend school. Moving Forward Implications for Gender Equality The BW program is not without flaws. How- Apparel jobs can help women gain more equality. ever, it is a step forward and it has contributed Working in urban areas, in the formal sector, and significantly to improve working conditions in in fast-paced and demanding work in garment BW factories. It provides a quadruple win: to industries can act as an agent of change in breaking workers in terms of working conditions and old norms, such as the norm of women bearing overall welfare, to factory management in terms the burden of household chores. In Vietnam and of factory performance, to countries in terms Cambodia—men and women alike—mention of increased exports, and to buyers, in terms of that the division of labor at home is equal. These reputational gains. norms have evolved; workers acknowledge that How can workers in other parts of the world the equal arrangement they are experiencing now experience better job quality? The issues raised is different from their parents’ generation. Another by workers in other countries, such as Kenya, measurement of gender equality is women’s are concerns that a program such as BW is well agency in household decision-making, whether equipped to address. In addition, improvements women take part in household decision-making in working conditions may spread to other or whether major decisions in the households factories, either endogenously (on their own) or are made jointly. In Cambodia, most married exogenously (being mandated or incentivized workers report that they make major decisions from other actors). (such as about children’s schooling and finances) with their spouses. Interestingly, the longer they How Can Programs Such as BW Be work in the apparel industry, the more likely they Expanded? are to share joint decision-making power within One might wonder why factories have not imple- their households. mented such human resource management (HRM) While working in the apparel sector can help techniques on their own, if there are so many women exercise greater agency, programs such as benefits to factories’ productivity. Evidence of BW also have a role to play in promoting greater spillover effects—that factories will learn from gender equality. In this regard, communication other factories about HRM due to incentives skills learned through BW training can be key in related to improve productivity—has been mixed. changing parochial norms. Equipped with com- Instead, active and creative policies are needed munication skills, women in the apparel sector to scale up the scope of BW programs. Evidence negotiate new roles inside their home and in society. has shown that incentives to governments of In most cases, quantitative results (in Cam- apparel-exporting countries can improve work- bodia) and qualitative findings (in Cambodia, ing conditions in textile and garment factories. Lesotho, and Vietnam) confirm that women and A prime example is the creation of the Better xviii | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Factories Cambodia Program. Finally, in order to As they are on the frontlines, their concep- ensure the sustainability of BW programs, local tions of job quality should ultimately be stakeholders need to gradually take ownership driving program aims. Data reviewed in of program implementation. our study finds that workers consistently cite occupational safety and health (OSH) How Can Programs Such as BW Be as a significant area of concern. Although Improved? programs such as BW have contributed to While Better Work is not a panacea for all of the making improvements in this area, more problems in developing countries or the apparel work remains to be done to ensure that basic sector in particular, several lessons can be learned health and safety standards are achieved for from the program’s experience. workers. Clearly, changes in working condi- tions, especially with respect to safety and • First, the relationship between workers and health, cannot come from efforts by factory management is a crucial aspect of working management alone. It also needs cooperation conditions and improving this relationship is from workers to change their behaviors. In not costly to implement. Across the sample this regard, advisory and training services can of workers surveyed for this study, workers help to shift the mindset away from “com- universally valued having a “good relation- pliance for audits” to “self-improvement.” ship with management.” Improving the rela- tionship between workers and management • Fourth, the benefits of certain program therefore represents a cost-effective way to features may extend beyond improving job improve job quality and motivate workers. In quality to positively impacting workers’ particular, training courses for managers can quality of life. Thus, future programming be designed with experience from countries needs to carefully consider the needs of that have been exposed to foreign direct workers beyond their immediate workplaces. investment (FDI) for some time. This can In this way, programs can expand their reach help prevent entrenched animosity between and tailor the content of training modules foreign managers and local workers, which to help improve workplace productivity and can be difficult to remedy at a later stage. enable workers to live healthier, happier, and Mechanisms designed to promote healthy more fulfilling personal lives. Stakeholders worker-management relations, such as the can also capitalize on life skills training to PICCs established by BW, have proven to advance social change, particularly con- be effective and can be used as a model for cerning gender equality. Our primary data future programming. revealed a particular area of concern that future efforts would do well to address: the • Second, one of the key findings from the lack of access to finance for apparel workers. mechanism design literature is that trans- Financial products need to be adapted to parency tends to improve behavior. This not better meet the specific needs and circum- only encourages the employer and potential stances of apparel workers. clients to address key areas in which they are failing their workers, but also empow- • Fifth, convincing employers that improving ers workers in that they can see that their job quality benefits their bottom lines as concerns are being heard. much as it does their reputations is critical. While this evidence exists to some extent, • Third, actively involving workers at all further business-related research demonstrat- stages of the program cycle (development, ing the positive effects that improved HR implementation, and monitoring) is critical. policies can have on productivity would be Executive Summary | xix of great value. In this regard, collecting bet- and (2) to leverage development finance in ter data for monitoring working conditions support of initiatives to improve working should be a priority. conditions. Although the BW program is • Finally, in the case of the BW Program, pro- focused on the apparel sector, our findings active efforts are needed to expand its reach. suggest that many other labor-intensive Specifically, programs may need to publicize manufacturing sectors can also benefit key success stories and come up with cre- from similar interventions. In any program ative incentives to increase participation. seeking to improve job quality, program Two possible avenues for promoting better sustainability needs to be carefully planned job quality are: (1) to link improvements in to ensure sustained success in achieving working conditions with trade agreements program goals. Chapter 1: Introduction Highlights Job quality matters. Exports, especially of apparel, can improve welfare and reduce pov- L erty. While traditionally, policy makers have focused on promoting jobs as a development strategy, the number of jobs alone may not be sufficient to alleviate poverty. The challenge lies in improving job quality in the apparel sector, thereby increasing the likelihood that these jobs will both boost gender equality and reduce poverty. The apparel industry is known for being labor intensive with low barriers to entry for women L relative to other global manufacturing sectors. The apparel industry is organized in a global value chain comprised of four main stakehold- L ers: buyers, governments, workers, and factory managers. These stakeholders play a role in and stand to gain from improving working conditions in the global apparel industry. This study focuses on the Better Work program as it is perhaps the most comprehensive L attempt to improve working conditions in the apparel sector. The aim of the study is to understand how job quality can be improved and how improved job quality contributes to development outcomes. Globalization and Job Quality as, foreign direct investment (FDI) entering coun- tries to expand the export sector (Robertson et al. In developing countries, globalization is often 2009). FDI, especially in manufacturing, can pro- experienced as, and therefore effectively defined mote development (Moran 2006). In this regard, 1 2 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector it is common, if not the norm, for developing some jobs can actually diminish agency if they countries entering global markets to concentrate are exploitative or demeaning. Thus, this study in apparel manufacturing. Consequently, apparel recognizes that while jobs in the apparel sector manufacturing lies at the nexus of globalization, offer a promising and realistic entry point for jobs, and poverty (Lòpez-Acevedo and Robertson women into the formal labor force, these jobs 2012). FDI in apparel manufacturing and exports may actually reinforce structural inequalities by have an unusually high development potential further hindering women’s agency. For purposes because apparel manufacturing workers tend to of this study, quality jobs are defined as those be women whose alternative options are likely that are characterized by pay and policies that to be in low-skilled agriculture and service sec- increase both income and agency. tors. Working in apparel manufacturing can also Job quality is significantly influenced by factories’ provide women with greater economic oppor- human resource management policies. While the tunities that enhance their agency.1 Therefore, term human resource management (HRM) may for millions of poor unskilled workers, jobs in suggest administration and bureaucracy to some apparel manufacturing can be a first step toward readers, in developing countries, HRM policies are escaping poverty. those that shape and define job quality. Ichniowski, Traditionally, policy makers have focused on Shaw, and Prennushi (1997) argue that changes in promoting jobs as a development strategy. How- HRM practices can be viewed as another aspect of ever, jobs alone may not be sufficient to alleviate production technology akin to shop floor produc- poverty. Job quality also matters. The low wages, tion technologies. This implies that HRM policies long hours, high temperatures, excessive noise, can be shared, transferred, and learned just like poor air quality, unsanitary work environments, production technologies. At the same time, it is risky, and abuse (both verbal and physical) in many if not flatly inaccurate, to assume that all firms are developing country manufacturing workplaces aware of the best technologies at all times. There- are often cited as evidence that “sweatshop fore, helping to transfer HRM technologies has the conditions” characterize production in relatively potential to help firms in developing countries and poor countries. Furthermore, harsh working positively impact people’s lives. Not only can effec- conditions in apparel factories are central to a tive HRM practices enhance working conditions, large and growing debate about globalization and but also they can improve productivity, factory labor standards (Elliott and Freeman 2003; Har- performance, and firm survival. Brown, Dehejia, rison and Scorse 2010; Locke and Romis 2010; and Robertson (2011) show that improvements in Brown et al. 2011).2 Several organizations have working conditions—measures of job ­ quality—in responded to growing public concern over the Cambodia positively correlate with firm survival. issue by pressuring and working with governments In addition, Brown, Dehejia, and Robertson (2012) and employers to improve working conditions.3 show that firms very rarely reverse improvements, As the Gender at Work companion to the further supporting the idea that changes are linked 2013 World Development Report (WDR) on to firm survival. Jobs makes clear, while jobs can add value to This study focuses on one of the most significant people’s lives, the specific jobs that are beneficial programs aimed at transferring HRM technology to women’s agency varies. In this regard, Gender and demonstrates how this kind of technology at Work cautions that the possibility exists that transfer can help achieve development outcomes, especially for women. “Agency is the ability to make decisions about one’s own life Background of the Apparel Sector 1 and act on them to achieve a desired outcome, free of violence, retribution, or fear.” (Klugman et al., 2014, 13) 2 The debate stems from two opposite views. On one hand, some The emergence of garment4 manufacturing indus- researchers argue that globalization might erode working condi- tries in low-income and developing countries tions and reduce labor compliance in export-oriented sectors. Others contend that free trade does not interfere with labor compliance. 3 See Appendix B for a list of organizations and initiatives working 4 Throughout this study, the terms “garment” and “apparel” will be used to improve work conditions globally. interchangeably. Chapter 1: Introduction | 3 Figure 1.1: Incentive Structure for Stakeholders in the Apparel Value Chain • Reliable sourcing • Competitiveness • Reputation • Jobs • Cost e ective audits • Enforcement capacity Buyers Government Workers Factories • Working conditions • Access to markets • Jobs and income • HR management • Gender equality • Productivity gain allows women to take advantage of the opportu- who stand to gain from improvements in work- nities offered by employment. As Khosla (2009) ing conditions in global apparel supply chains. notes that female workers themselves are best Figure 1.1 summarizes the incentive structure of source of information on the contribution of the four main stakeholders in the global apparel working in garment factories. Even though jobs value chain. in garment industries are not the most desirable The four main stakeholders in global apparel ones, many women find value in working in supply chains are buyers, governments, workers, this sector. Amin et al. (1998, 195) write that and factory management. “women themselves value the modern nature of Modern apparel production is organized into their work, consider garment work to be a lesser supply chains that are led by developed-country hardship than most forms of agricultural labour, buyers who try to maximize profits by choosing and value the autonomy and independence that suppliers to produce their products. While their come with earning an income.” Our field research concerns center on finding the lowest cost options, corroborates this conclusion. there are many other factors such as reliability, There is a growing consensus that expanding timeliness, and quality of products. In addition, the apparel sector not only creates beneficial reputation-sensitive buyers are generally more opportunities for women, but also that working engaged with factories and associate with factories conditions in these factories can be improved. But that have higher levels of compliance with national how can such an improvement be accomplished? and international labor standards. Buyers have While the change may take place on the factory an incentive to improve working conditions in floor, it is only a part of the global apparel value developing countries when they face reputation chain. In order to grow, local apparel sectors risk or adverse effects from unfavorable reports must join global supply chains. Thus, incentives about production in their supply chains. There for different stakeholders in the global value is significant anecdotal evidence suggesting that chain must be considered in order to come up reputational risk is a significant concern to buy- with practical solutions. In this regard, efforts ers. One example from 1996 is the case of Nike, to improve working conditions in supply chains which responded to an initial op-ed piece by should become a focus for a range of stakeholders Bob Herbert in the New York Times. Subsequent 4 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector efforts by Nike and other buyers—as well as an environment for continuous improvement in current efforts by the Alliance for Bangladesh working conditions with both short- and long- Worker Safety and the Bangladesh Accord on term implications. Fire and Building Safety, both of which started The benefits resulting from improving working in the wake of the Rana Plaza factory collapse in conditions can accrue to factory management as April 2013—are important examples of buyers well. A main concern among factory managers responding to public concerns about working about improving working conditions is cost. conditions in supply chains. Although there is a range of costs for improve- Governments also have an incentive to improve ments in different working conditions, managers working conditions. Aside from the concern that may resist those that are initially costly if they are governments might have for their working popula- unsure of the benefits in the medium to long term. tions, governments benefit by attracting foreign As a result, managers may choose not to make investment. Kucera (2002), for example, finds that investments aimed at improving working condi- countries that better comply with global labor tions. On the other hand, if such improvements standards attract more foreign investment. Faced help workers focus on their work, productivity with limited resources for monitoring working may increase. If the value of worker productivity conditions, governments that aim to improve those increases more than the cost of the investment conditions can obtain resources and support from to improve working conditions, then improving foreign governments to assist with their monitor- working conditions can increase factory profits, ing efforts. For example, the U.S. Department of creating a winning situation for all. Labor (DOL) implements technical assistance projects with a particular focus on child labor.5 Better Work: An Innovative Model In addition, DOL’s International Labor Affairs Bureau actively supports improvements in labor for Improving Working Conditions laws and enforcement for workers throughout The joint International Labour Organization the economy. An example is the Vietnam Labor (ILO)-International Finance Corp (IFC) program, Law Implementation Project (Industrial Relations Better Work (BW), is perhaps the most compre- Project, Phase II), a US$3 million program to hensive attempt to improve working conditions help Vietnam’s Ministry of Labour—Invalids and in the apparel sector. It fully appreciates the Social Affairs (MOLISA), General Confederation incentive structure of key stakeholders in the of Unions (VGCL), and the Chamber of Com- apparel value chain and therefore is able to gain merce and Industries (VCCI) meet international the commitment of each actor, as well as leverage labor standards in labor legislation. each stakeholder’s unique strengths. Better Work Workers have a clear stake in improving differs from other forms of social regulation in working conditions in both the short run and a number of ways. First, factory assessments are the long run. In the short run, improvements consolidated and carried out by trained Better in ambient conditions, such as temperature, air Work enterprise advisors (EAs). Second, visits quality, and so on, would improve the quality of are unannounced, which mitigates the likelihood life for workers. But job quality also encompasses that employers can make superficial changes on freedom of association and collective bargain- days they are assessed. Third, the assessment ing, which have been instrumental in improving process is comprehensive, going beyond baseline longer-run issues related to working conditions in requirements found in buyer codes of conduct. many countries around the world. Furthermore, Fourth, BW offers advisory and training services, resolving management-worker disputes and which means the program can not only identify improving workplace communication can create key areas of concern, but also initiate positive change. Advisory services and the focus on factory-level social dialogue through Performance 5 Among the many examples is the Global Action Program on Child Improvement Consultative Committees (PICCs) Labor Issues (GAP), which funds nearly US$16 million to support the ILO’s Roadmap for Achieving the Elimination of the Worst are critical aspects that differentiate Better Work Forms of Child Labor by 2016 through capacity-building. from other initiatives. An extensive discussion of Chapter 1: Introduction | 5 the program’s advisory and training services can poverty reduction and welfare throughout society. be found in Chapter 4. The latter has not yet been fully analyzed. This The structure of Better Work includes a global study provides an evidence base for understand- program mostly based at the International Labour ing the relationship between job quality and Organization (ILO) in Geneva, which oversees development by answering the following main the operational and research activities of Better research questions: Work in the eight program countries. The Better 1. How can job quality be improved? Work Management Group, which consists of two senior ILO and two senior IFC staff, acts as 2. Do improvements in job quality reduce the program’s executive board. The Better Work gender inequality, improve worker welfare, Advisory Committee includes international worker and help alleviate poverty? and employer organizations, global buyers, donor 3. Do improvements in job quality boost firm governments, and experts in global supply chains. performance? Each Better Work country has a program man- To answer these broad questions, workers’ ager. In each office, training officers and EAs are perceptions of job quality in relation to the Better in charge of conducting factory assessments and Work program were taken into account. In addi- providing advisory services. Within each program tion, the relationship between the BW program country, a tripartite project advisory committee and measures of gender inequality, worker welfare (PAC) includes representatives from business, and poverty alleviation were also analyzed. Spe- labor, and government. The PAC is an important cifically, the analysis examines impacts on gender mechanism as it brings together stakeholders in gaps in economic opportunities, particularly asset each program country together to develop work accumulation, gender wage gaps, and women’s plans for improving compliance and competitive- agency measures such as the dynamic between ness. If there are any disagreements within groups, men and women in terms of decision-making and the PAC also provides an opportunity for them to household activity allocation. reconcile their views and bring one united voice The study provides evidence on job quality to the table. The rest of the report details where, in low-income countries in which apparel is an how, and how effectively Better Work operates. important sector. The focus of the study is the The Better Work (BW) program grew out of Better Work program whose aim is to improve Better Factories Cambodia (BFC). It has been working conditions in the apparel sector and the one of the most significant programs aimed at prospects of better jobs for apparel factory work- transferring HRM technology and has led to ers in program countries. It is expected that the improved job quality in the apparel sector. The findings and the lessons from this case study will program website articulates Better Work’s goal of aid in the design of effective policies to improve improving the lives of at least 3 million workers job quality, labor mobility, and reduce gender and millions more of their family members by disparities in other sectors and countries. The 2017. Clearly, BW envisions its work having an objective of this study is not to evaluate the per- impact beyond factory walls. It aims to achieve formance of the Better Work program in partner this goal by spurring “sustainable improvement countries, but rather to complement the existing in adherence to national labor law and core labor compliance data with data collected directly from standards, and strengthening business competi- workers—both quantitative and qualitative. In tiveness in major garment producing countries.”6 addition, surveys conducted for this study differed Research Questions markedly from the official compliance data that BW routinely collects.7 Improvements in job quality have immediate effects on the mental and physical well-being of workers and can also have broader effects on 7 The detailed field research methodology for each country is 6 http://betterwork.org/global. included in Appendix C. 6 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Analytical Approach job quality in different countries. Therefore, focus group discussions in Vietnam, Lesotho, and Kenya This study considers the context of the Better were conducted to capture worker’s individual Work program, an example of a comprehensive perceptions about job quality. multi-stakeholder intervention, to understand how Because this study is not an experiment, we use job quality can be improved and how improved triangulation to reinforce our findings. In particu- job quality contributes to development outcomes. lar, we construct independent control groups and The overall objective of the study is to conduct an complement quantitative with qualitative data. empirical analysis that informs each of the main research questions discussed earlier and adds to a. Constructing independent control groups. the current body of research. The Better Work One of the main contributions of this study, program has attracted the attention of academ- therefore, will be to provide an alternative ics, policy practitioners, and researchers. Much control group for understanding the differences of the recent work evaluating the effects of the in job quality in BW and non-BW factories. Better Work program has come from the Tufts To this end, our approach relies on collecting University Better Work Monitoring and Evalu- primary data from comparable BW and non-BW ation project (TUBWME), which has produced factories in addition to identifying comparable academic papers, policy briefs, and baseline BW and non-BW factories in national surveys reports. TUBWME combines worker and manager and censuses. In other words, we use household surveys with firm-level characteristics to evaluate and labor force surveys to identify workers many of the potential effects of the Better Work who have not participated in the BW program program. Examples include Brown, Dehejia, and (the control group), but work in the apparel Robertson (2011 and 2012); Veeraragoo (2012); sector, and compare them with the workers in Oka (2010a and 2010b); and other papers cited BW program factories who have experienced earlier. improvements in working conditions and labor The research methodology of this study attempts compliance (the treatment group). to eliminate self-selection bias. In terms of quan- b. Complementing quantitative with qualitative titative analysis, the relative outcomes of BW data. This study is informed by four original versus non-BW factories and those that undertake field studies conducted by our research team.8 compliance only versus additional activities could In Lesotho and Cambodia, quantitative surveys potentially suffer from an endogeneity problem: of garment factory workers and focus group the most productive firms self-select into export- discussions (FGDs) were conducted. In Viet- ing, into BW, into “being compliant.” To address nam and Kenya, FGDs were conducted. This this problem, we corroborate quantitative results information, which can be found throughout with qualitative findings from focus groups, in the report, helps to provide both qualitative and which we have opportunities to delve deeper into quantitative evidence to support the conclusions workers’ motivations. That said, we recognize the drawn. Besides addressing our key question of potential for this problem and caution the reader interest—whether improvements in job qual- regarding interpretation. ity reduce gender inequality, improve worker Although thorough and informative, the exist- welfare, and help alleviate poverty—this field ing literature raises many significant questions research also allows us to present original about methodology and evaluation that this study research on important issues. One such issue attempts to address. Concerning the substantive is how working in the apparel sector impacts part, this study provides a homegrown definition gender dynamics outside factory walls. of job quality as defined by workers themselves. One of the initial research gaps involves defin- ing job quality. The concept, however, may not apply in all cultures and countries. Because this program focuses on job quality, we must first 8 The detailed field research methodology for each country is evaluate how workers express concerns about included in Appendix C. Chapter 1: Introduction | 7 Overview of the Report Structure Harrison, Ann E., and Jason Scorse. 2010. “Mul- tinationals and Anti-Sweatshop Activism.” Chapter 2 offers background information on American Economic Review 100.(1): 247–73. apparel sector workers and their understanding Herbert, Bob. 1996. “In America: Nike’s Pyramid of job quality. Understanding the Better Work Scheme.” New York Times, June 10. http://www program and how it has evolved from its fore- .nytimes.com/1996/06/10/opinion/in-america- runner, Better Factories Cambodia, is the subject nike-s-pyramid-scheme.html. of Chapter 3. Given the program’s focus on Ichniowski, Casey, Kathryn Shaw, and Giovanna improving factory conditions, Chapter 4 discusses Prennushi. 1997. “The Effects of Human changes in working conditions. In this regard Resource Management Practices on Productiv- and as mentioned earlier in the discussion of job ity: A Study of Steel Finishing Lines.” American quality, programs aimed at improving working Economic Review 87 (3): 291–313. conditions can impact workers’ lives beyond ILO (International Labour Organization). 2010. factory walls. Therefore, Chapter 5 considers Roadmap for Achieving the Elimination of the relationship between programs such as Bet- the Worst Forms of Child Labor by 2016. ter Work and the personal lives of workers and Outcome Document, The Hague Global Child their families. Chapter 6 discusses how factories’ Labour Conference May 10 and 11, 2010. human resource management policies can improve http://www.ilo.org/wcmsp5/groups/public/ productivity and profitability. Chapter 7 highlights ---ed_norm/---ipec/documents/meeting possible avenues for improving working condi- document/wcms_ipec_pub_13453.pdf. tions, both in terms of spillover effects on non- Khosla, Nidhi. 2009. “The Ready-Made Garments participating factories and expanding the reach Industry in Bangladesh: A Means to Reducing of programs such as Better Work to cover more Gender-Based Social Exclusion of Women?” factories. Finally, Chapter 8 provides a summary Journal of International Women’s Studies 11 of our key findings and offers recommendations (1): 289–303. to further improve job qualitys. The life stories of Klugman, Jeni, Lucia Hanmer, Sarah Twigg, four workers in the apparel industry from Lesotho Tazeen Hasan, Jennifer McCleary-Sills, and and Vietnam, as well as the case of Kenya, are Julieth Santamaria. 2014. Voice and Agency: also featured at the end of some chapters. Empowering Women and Girls for Shared Prosperity . Washington, DC: World Bank References Group. https://openknowledge.worldbank.org/ handle/10986/19036 License: CC BY 3.0 IGO. Amin, Sajeda, Ian Diamond, Ruchira T. Naved, Kucera, David. 2002. “Core Labour Standards and Margaret Newby. 1998. “Transition to and Foreign Direct Investment.” International Adulthood of Female Garment-Factory Work- Labour Review 141.(1-2): 31–69. ers in Bangladesh.” Studies in Family Planning Locke, Richard M. 2013. The Promise and Limits 29 (2): 185–200. of Private Power: Promoting Labor Standards Brown, Drusilla, Rajeev Dehejia, and Raymond in a Global Economy (Cambridge Studies in Robertson. 2011. “Working Conditions and Comparative Politics), Cambridge University Factory Survival: Evidence from Better Facto- Press, New York, New York. ries Cambodia.” Better Work Discussion Paper Locke, Richard M., and Monica Romis. 2010. Series 4, International Labour Office, Geneva. “The Promise and Perils of Private Voluntary Brown, Drusilla, Rajeev Dehejia, and Raymond Regulation: Labor Standards and Work Orga- Robertson. 2012. “Retrogression in Working nizations in Two Mexican Factories.” Review of Conditions: Evidence from Better Factories Cam- International Political Economy 17 (1): 45–74. bodia.” Better Work Discussion Paper Series 6. Lòpez-Acevedo, Gladys, and Raymond Robertson. Elliott, Kimberly Ann, and Richard B. Freeman. 2012. Sewing Success? Employment, Wages, and 2003. Can Labor Standards Improve under Poverty following the End of the Multi-Fibre Globalization? Washington, DC: Institute for Arrangement. Washington, DC: World Bank. International Economics. 8 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Moran, Theodore H. 2006. Harnessing Foreign of Cambodia’s Garment Sector.” Advances in Direct Investment: Policies for Developed and Industrial and Labor Relations 17: 153–83. Developing Countries. Washington, DC: Center Robertson, Raymond, Drusilla Brown, Gaëlle for Global Development. Pierre, and Maria Laura Sanchez-Puerta, eds. Oka, Chikako. 2010a. “Accounting for the Gaps 2009. Globalization, Wages, and the Quality in Labour Standard Compliance: The Role of of Jobs: Five Country Studies. Washington, Reputation-Conscious Buyers in the Cambo- DC: World Bank. dian Garment Industry.” European Journal of Veeraragoo, Selven. 2012. “Does Exploitation Pay? Development Research 22 (1): 59–78. Evidence from Better Work Vietnam” (master’s Oka, Chikako. 2010b. “Channels of Buyer Influ- thesis, Tufts University) http://gradworks.umi ence and Labor Standard Compliance: The Case .com/15/12/1512805.html. Chapter 2: Apparel Workers Highlights Demographic profile: Workers in the textile and apparel industry tend to be younger than L those in other industries. The average age of textile workers is 26 in Cambodia and 30 in Vietnam. Most are female (about 80 percent in Cambodia and Vietnam). Contrary to the popular belief that these workers tend to be single, about 50 percent are married. The apparel industry provides job opportunities for young people, mostly women from rural L areas. Although apparel wages are low by international standards, the sector offers wage premiums, which draw women and men from rural areas. High wages and good working conditions are two of the top reasons why workers in Cambodia choose apparel factory jobs. Data also show that a sizable number of women are supervisors in the apparel industry. Workers defined job quality: Across the four countries (Kenya, Lesotho, Cambodia, and L Vietnam) where field research was conducted, it was found that job quality means largely the same thing. Certain economic characteristics such as good pay and benefits are prominent in workers’ minds in addition to social considerations such as collegial rela- tions with managers and supervisors, clean and safe work environments, and reasonable working hours. Thus, many of the qualities that workers from our field research value can be achieved at little to no economic cost. The apparel industry is known for being labor worldwide: making up roughly 80 percent of intensive relative to global manufacturing sectors. the global workforce in garment manufacturing As employees, women dominate the apparel sector (HERproject 2010). Understanding why this is 9 10 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector the case and the implications of a predominately represen­ t ative household survey data from female labor force for programs such as Better Cambodia and Vietnam confirms this is indeed Work is a key starting point. As a background for the case, and also reveals interesting information the analysis of working conditions in the apparel about the workers (Box 2.1). Data from Bangla- sector, this chapter will introduce readers to desh, another large garment producing country, these workers by relying primarily on empirical show a pattern similar to those of Cambodia data. The discussion will center on what attracts and Vietnam. Sikdar, Sarkar, and Sadeka (2014) workers to the garment industry and whether any found that 92.5 percent of the female workers differences exist between men and women. This were under the age of 30 in the Bangladeshi chapter also describes what job quality means apparel industry. to apparel workers in the four countries (Kenya, Contrary to the popular belief that apparel work- Lesotho, Cambodia, and Vietnam) where field ers are mostly single, Sikdar, Sarkar, and Sadeka research was conducted. found a fairly even split between married and unmarried workers, with 55 percent of surveyed female workers being married. This is also largely Who Are Garment Workers? mirrored in the Cambodia Worker Survey we A general perception of garment workers in conducted, where it was found that roughly half developing countries is that they tend to be of workers were married or living with a partner mostly young women. Analysis of nationally (48 percent). Box 2.1: Profile of Garment and Textile and Apparel Workers in Cambodia and Vietnam Size: In Cambodia, about 7.9 percent of employed workers (aged between 15 and 64) worked in the textiles and apparel industry in 2012. The apparel sector was less signifi- cant in Vietnam, where about 3.5 percent of employed workers (aged between 15 and 64) worked. Location: In Phnom Penh, the capital and economic center of Cambodia, the textile and apparel industry provides a significant share of employment. About 15.2 percent of work- ers in Phnom Penh work in the industry, and 25.7 percent of jobs in the sector are located in Phnom Penh. In Vietnam, about 30.8 percent of the textile and apparel workers live in urban areas, while about 27.7 percent of the non-textile and apparel workers reside there. Demographic profile: Textile and apparel factory workers in Cambodia and Vietnam are predominantly women (83 percent and 80 percent, respectively). Workers in the textile and apparel industry tend to be younger than those in other industries. In 2012, the aver- age age of the textile workers was about 26 years in Cambodia and 30 years in Vietnam, while that of non-textile and apparel workers was 35 years and 38.5 years, respectively. Education: In Cambodia and Vietnam, only a small proportion of textile and apparel work- ers has received education beyond the secondary level, and its share is proportionately smaller than that of non-textile and apparel workers. At the same time, larger shares of the textile and apparel workers have completed primary education and received at least some lower-level secondary education, compared with the non-textile workers. This holds true for both countries. Source: Cambodia—Authors’ analysis from Cambodia Socio-Economic Survey (CSES) 2012. Vietnam—Authors’ analysis from 2012 Vietnam Household Living Standards Survey. Chapter 2: Apparel Workers | 11 Occupational Sex Segregation following comments from participants in our focus group discussions (FGDs) are instructive: Occupational gender segregation is a feature in many labor markets in which some jobs and There are many men working in the steaming boiler occupations are highly dominated by either men department where there are no women. I think it’s or women. Occupational segregation is a con- not suitable for women. cern to policy makers for two reasons. First, it is —28-year-old female worker, inefficient economically, preventing able people BW Vietnam factory from moving into occupations where they could perform well and that would satisfy them more There are no defined roles or expectations of men than those open to them. Second, occupational and women. In the garment industry, more women segregation is a major cause for persistent wage do sewing than men, while more men do the pro- gaps (Hegewisch et al. 2010). Fontana and Sil- duction line jobs as moving machines is heavy task. berman (2013) found pronounced occupational —40-year-old male supervisor, segregation in Vietnam. Our 2015 Cambodian non-BW Vietnam factory survey data also reveal patterns of job segregation There are some divisions, especially related to lifting by gender as presented in Table 2.1. The biggest goods into container and closing carton boxes. Male discrepancies can be found in the sewer position workers are responsible for those tasks. Basically, (where more than half of surveyed women work heavy tasks are for male workers. compared to one in four men) and in the spreader position (only 4.19 percent female compared to —25-year-old female worker, 17.86 percent male). BFC category A1 factory, Cambodia Most workers interviewed did not report having Contrary to some literature, the primary data objections to the occupational segregation. They for this study show that the apparel industry identified men’s physical strength as the key reason provides opportunity for female workers to that men tend to be concentrated in occupations progress in their career, considering that a sig- that require relatively more heavy lifting. The nificant number of women are supervisors. The 2015 Cambodia apparel workers survey data show that a larger share of female workers (3.5 percent) work as supervisors, compared to less Table 2.1: Distribution of Workers than one percent of male workers. A focus group by Jobs and Sex, Percentage discussion of supervisors in Vietnam reveals a What is your job similar pattern for career mobility. All of those at your factory? Sex of workers interviewed attributed their career advancement All to dedication in their jobs as workers, and not Female Male workers their gender. (N=453) (N=112) (N=565) Sewer 54.53 24.11 48.5 Why Are Most Garment and Textile Cutter 3.31 5.36 3.72 Factory Workers Women? Spreader 4.19 17.86 6.90 Some might view that the presence of women in Checker 6.18 2.68 5.49 the garment industry as a reflection of structural Packer 5.74 11.61 6.90 gender inequality of the economy. However, Quality control 6.84 1.79 5.84 Khosla (2009, 295) explains that “the massive Supervisor 3.53 0.89 3.01 employment of women in the ready-made gar- ments industry, while a boon for poor, unem- Helper 1.10 0.89 1.06 ployed women is ironically also a reflection of the Other job 14.57 34.82 18.58 Total 100 100 100 1 For the Cambodia analysis, “Category A” factories are factories that received only assessment service from Better Factories Cam- Source: Cambodia Workers Survey, 2015, authors’ calculation. bodia (BFC), but not advisory or training services. 12 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector unequal treatment given to women both within workers. In this regard, male FGD participants and outside this industry.” Citing the case of Ban- reported that they were discriminated against, gladesh, Khosla explains the unequal treatment stating that it was difficult for men to get jobs of women, who are often hired because they are because factory managers “don’t want male thought to be obedient. They tend to be placed in workers” or prefer female workers because they jobs requiring fewer technological skills and even “know the machines and are easy to work with.” after controlling for experience and education, Khosla concludes that they receive lower wages Supply: Low-Skilled Women for the same job. Looking for New Opportunities For purposes of our study, a supply and in Urban Areas demand approach is useful in explaining the The 2015 Cambodia Apparel Workers Survey data prevalence of women working in the global confirm that jobs in the garment sector represent garment industry. On the supply side, from our an important entry point into the formal sector field research, we have come to know that many for workers from rural areas. Consistent with the low-skill women (and men) are looking for new popular belief about garment workers, almost job opportunities in urban areas given the lack all workers (97 percent) in the survey grew up of enticing employment prospects in the rural in other provinces and moved to Phnom Penh in areas where they were born. On the demand search of jobs. For about 60 percent of workers, side, employers seem to show a preference for their jobs at their current factory are their first hiring women. jobs in the garment industry, while the rest have already worked in another garment factory. On Demand: Preference of Employers average, workers have been employed in the When studying Bangladesh, Sikdar, Sarkar, and garment industry for 4.1 years, but have worked Sadeka (2014, 174) identify a clear employer in their current factories for only 2.5 years. For preference for women; “employers prefer female workers who started in the garment industry at workers not only because they are cheaper and another factory, the average tenure with the cur- abundantly available, but also because they are rent factory is 2.1 years, and they tend to have more vulnerable, obedient, and manageable worked in the industry for about 5.8 years. One than male workers.” Many other authors agree woman interviewed who worked in a garment (Amin et al., 1998; Kabeer and Mahmud, 2004; factory, moved back to her rural hometown and Kibria, 1995 and 1998; Paul-Majumder and then returned back to the city to work again in Begum, 2000). Moreover, Sidkar, Sarkar, and a garment factory commented: Sadeka, through their surveys, were able to better “My previous workplace was a garment factory understand why employers prefer young women in the sewing section. The reason that I quit was in particular. On the one hand, management because my siblings got married, and there was no claimed to prefer younger women because they one to look after the house, so my parents asked me were more productive than older workers. On to come home. I live in Prey Chor district. I stayed the other hand, older female workers complained home for a while and felt really bored, so I asked my that management would treat them in such a parents to go back to work [in the new factory].” way as to force them to quit. Studies reviewed by Dominguez et al. (2010) suggest that in a number —25-year-old female sewer, of Latin American countries, married women are BFC factory, Cambodia gradually becoming the preferred labor force in Some workers, especially male workers, the textile sector because they are perceived to be reported that they joined the garment industry more pliable and less likely to change jobs than because the workload is lighter than that of their single women. Yet there is no conclusive evidence previous jobs in construction. The 2015 Cambodia of a universal preference between married and Apparel Workers Survey also revealed reasons unmarried women. workers chose jobs at the factory. The survey Our qualitative research in Lesotho also allowed workers to indicate more than one reason. revealed an employer preference for female Table 2.2 summarizes the results. Chapter 2: Apparel Workers | 13 Table 2.2: Reasons for Choosing to Work (2014) estimate the wage premium in apparel in in the Garment Industry both Sri Lanka and Cambodia. Using household surveys, they estimate that the apparel sector Why did you choose to Percentage of work at this factory? respondents wage premium prior to the end of the Multi-Fibre Arrangement was 39.2 percent in Cambodia. Female Male All Furthermore, wages in the garment sector are high Heard they have high 57 58 57 paying relative to the alternatives that younger wage unmarried less-educated women have elsewhere Better working 28 30 29 in the economy. This result complements Powell conditions and Skarbek (2006) and Robertson et al. (2009), Closer to home 20 12 18 who estimate significant apparel wage premi- Have friends/family 15 19 16 ums in a range of developing countries, namely, here Cambodia, El Salvador, Honduras, Indonesia, It was the only job 10 9 10 and Madagascar. available The literature elaborates on why the apparel Other reason 5 7 5 sector appeals to workers. According to Keane and te Velde (2008), the textile and clothing sectors Source: Cambodia Workers Survey, 2015, authors’ offer women in particular better opportunities calculation. Note: The total number of observation of the survey is 565, than they would have in their rural hometowns. comprising 453 women and 112 men. This question allows In addition, apparel sector wages may also be more than one answer; thus, number of responses might add up to more than the number of workers in the survey. higher than those of other jobs women working in the apparel sector could obtain in urban areas. By way of example, apparel wages are twice Three points are clear from Table 2.2. First, that of domestic servants in Bangladesh. Using workers respond to wages. They tend to go to data from six countries (Bangladesh, Pakistan, factories that they think will offer good wages. Philippines, Sri Lanka, Thailand, and Zambia), This is their top consideration, even above working the authors find that textile and clothing wages conditions, suggesting that a system that relies on are more than double those paid to agricultural the movement of workers to factories with good workers, are higher than those of several other working conditions to drive spillover effects of manufacturing industries, but are only half the programs such as Better Work may not be effective. overall average of manufacturing wages. Keane Second, workers do have space to choose where and te Velde, “The Role of Textile and Clothing to work. On average, only about 10 percent of Industries in Growth and Development Strate- Cambodian garment workers reported that they gies,” 2. This leads them to conclude that “textiles took their current job because they were the only and clothing is a first step up the value-added jobs available. Third, the main difference between industrialization ladder beyond agriculture but men and women in choosing a job is location before many other manufacturing and services as female workers prefer jobs that are closer to activities.” Robertson et al. (2009) estimate the their homes. wage premiums for apparel relative to the rest As mentioned earlier, although apparel wages of the economy for five developing countries are low by international standards, the sector and find that they are positive, large, and signifi- offers wage premiums, which draw women from cant. This means that, for example, in the case rural areas. One way to estimate the differences of Cambodia, garment workers earn up to 35 in wages across sectors is to estimate wage pre- percent more than they would in an “average” miums for each sector holding other demographic alternative industry. Compared to the estimates variables constant. Doing so effectively reveals of earnings in agriculture, which are significantly the premium that young, unmarried, less-educated below the average wages of comparable workers, women might earn in the apparel sector com- these premiums represent very significant earn- pared to what they might earn in other sectors. ings gains to workers moving from agriculture Savchenko, Lòpez-Acevedo, and Robertson to apparel. 14 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Box 2.2: How is Job Quality Defined in the Literature? Defining job quality is important but difficult because jobs have many different char- acteristics. The main way to measure job quality is through wages. Alternatively, job characteristics can be taken into account. Wage data are much easier to find than measurements of nonwage working conditions. The data for other aspects of working conditions (benefits, air quality, noise, unionization, among many others) are scarce and generally not comparable across countries. Yet, job quality can be measured by more than just money. It is also measured by nonmonetary elements attached to the job, such as social security coverage, job security, promotion opportunities, and the like. From a theoretical perspective, the relationship between wages and nonwage working conditions can be positive or negative. Using wages as a measure of working conditions, however, poses potential problems if workers receive higher wages as compensation for working in poor conditions. This is certainly the case, even in developed countries, in dangerous industries, such as mining. Beginning with Adam Smith, economists have long theorized that workers who take jobs in less favorable conditions must be compensated with higher wages; this is commonly referred to as “compensating differentials.” This theory implies that workers in developing countries who accept jobs with less favorable working conditions earn higher than average wages. Surprisingly, empirical evidence on the compensating differentials hypothesis has been mixed. Source: Robertson et al., 2009. way job quality is understood, have emerged. For “A job that makes me want example, the Decent Work agenda of the Inter- to go to work every morning national Labour Organization (ILO) attempts to when I wake up” better capture workers’ aspirations. According to the ILO website, Decent Work FGD participant in Vietnam in response to question on what is a good job to you? involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, While wages are an important factor in attract- freedom for people to express their concerns, orga- ing workers, nonwage factors also appear to be nize and participate in the decisions that affect their important. A broader discussion of job quality lives and equality of opportunity and treatment for follows. all women and men.2 Our study aims to address this challenge by What Does It Mean to Workers to asking workers how they perceive job quality. The results across the four countries where we Have “Job Quality”? conducted qualitative research through FGDs The literature, while recognizing certain nonwage (Cambodia, Kenya, Lesotho, and Vietnam) are characteristics of job quality, tends to focus on highlighted in this section. wages given that it offers the most easily quantifi- able measure (Box 2.2). In recent years, notable and increasingly popu- 2 Decent Work, http://www.ilo.org/global/topics/decent-work/ lar concepts, which expand on the traditional lang--en/index.htm. Chapter 2: Apparel Workers | 15 Table 2.3: Highest Ranked Job Quality Characteristics: Kenya, Lesotho, and Vietnam Ranking Country Kenya Lesotho Vietnam Cambodia 1 High salary High salary High and stable salary High salary 2 Friendly relations Reasonable Clean and safe work Friendly with managers/ working hours environment relations with supervisors supervisors 3 Reasonable working Friendly relations Sufficient benefits hours with managers/ supervisors 4 Sufficient benefits Clean and safe Friendly relations with work environment managers/supervisors 5 Clean and safe work Sufficient benefits Reasonable working hours environment Source: FGDs conducted as part of the workers survey for Kenya, Lesotho, and Vietnam. In Cambodia, the data were collected differently, thus, job quality cannot be ranked. In focus group discussions in Kenya, Lesotho, while there is some variation in the preference and Vietnam, workers were asked what job quality workers give to the four other common charac- means to them. In each FGD, workers’ feedback teristics identified. was listed on flipcharts, and they were then asked In the FGDs held in Cambodia, workers were to rank the top three. In other words, if they could not asked to list and rank key characteristics of a choose three characteristics of job quality from good job, but they did discuss what they liked and the list, what (in order of preference) would they did not like about their jobs. Many participants be? Table 2.3 summarizes the rankings across spoke about relations with supervisors. Despite the three countries.3 Given that more than one certain aspects of their job that they did not like, FGD was held in each country and there were most FGD participants were generally satisfied. different rankings of the top three, a list of the This comment by one of the FGD participants top five characteristics of job quality from each highlights a common sentiment: country is presented. “I am happy to recommend my relatives to work Across the three countries, there were common here in this factory because of the convenient work perceptions of the characteristics of a good job: and high salary.” high salary, friendly relations with management/ supervisors, reasonable working hours, clean and —31-year-old male worker, safe work environment, and sufficient benefits. BFC category A factory, Cambodia However, one aspect of job quality that emerged Across the four countries in which field research from FGDs only in Vietnam was stability of was conducted, it was found that job quality income. Vietnamese workers liked that the apparel means largely the same thing. Certain economic sector offered stable incomes they could count characteristics such as good pay and benefits are on. For the purposes of ranking, this was grouped prominent in workers’ minds in addition to social together with having a high salary. Having a high considerations such as respectful relations with salary is ranked as the most important charac- managers and supervisors, clean and safe work- teristic of a good job across all three countries, ing environments, and reasonable working hours. The lesson to be drawn here is that many of the qualities that workers interviewed for this study 3 For a complete list of all the characteristicss of job quality raised value can be achieved at little to no economic by workers see Appendix D. cost. For instance, training supervisors in how to 16 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector interact with workers in a friendly manner and Gender-Based Social Exclusion of Women?” improving HR policy can greatly enhance work- Journal of International Women’s Studies 11 ers’ satisfaction with their jobs at a minimal cost. (1): 289–303. Kibria, Nazli. 1995. “Culture, Social Class, and Income Control in the Lives of Women Garment References Workers in Bangladesh.” Gender and Society Dominguez, Edme, Rosalba Icaza, Cirila Quintero, 9 (3): 289–309. Silvia Lopez, and Asa Stenman. 2010. “Women ———. 1998. “Becoming a Garments Worker: Workers in the Maquiladoras and the Debate on The Mobilization of Women into the Gar- Global Labor Standards.” Feminist Economics ments Factories of Bangladesh.” Occasional 16 (4): 185–209. Paper 9 (pages 1–23). Geneva: United Nations Fontana, Marzia, and Andrea Silberman. 2013. Research Institute for Social Development, “Analysing Better Work Data from a Gender United Nations Development Programme. Perspective: A Preliminary Exploration of Paul-Majumder, Pratima, and Anwara Begum. Worker Surveys with a Focus on Vietnam, ILO 2000. “The Gender Imbalances in the Export and IFC. Better Work Discussion Paper Series: Garment Industry in Bangladesh.” Policy No. 13. International Labour Office, Geneva. Research Report on Gender and Development, Hegewisch, Ariane, Hannah Liepmann, Jeff Hayes, World Bank, Washington, DC. and Heidi Hartmann. 2010. “Separate and Powell, Benjamin, and David Skarbek. 2006. Not Equal? Gender Segregation in the Labor “Sweatshop Wages and Third World Living Market and the Gender Wage Gap.” Briefing Standards: Are the Jobs Worth the Sweat?” Paper IWPR (Institute for Women’s Policy Journal of Labor Research 27 (2): 263–74. Research) 377. Robertson, Raymond, Drusilla Brown, Gaëlle HERproject. 2010. “Investing in Women for a Pierre, and Maria Laura Sanchez-Puerta, eds. Better World, BSR (Business for Social Respon- 2009. Globalization, Wages, and the Quality sibility). http://herproject.org/downloads/ of Jobs: Five Country Studies. Washington, BSR_HERproject_report_Print%20Version.pdf DC: World Bank. Kabeer, Naila, and Simeen Mahmud. 2004. “Glo- Savchenko, Yevgenia, Gladys Lòpez-Acevedo, balization, Gender and Poverty: Bangladeshi and Raymond Robertson. 2014. “Do Apparel Women Workers in Export and Local Markets.” Exports Help Women in Developing Coun- Journal of International Development 16 (1): tries?” World Bank, Washington, DC. 93–109. Sikdar, Mehedi Hasan, Sujahangir Kabir Sarkar, Keane, Jodie, and Dirk Willem te Velde. 2008. and Sumaiya Sadeka. 2014. “Socio-Economic “The Role of Textile and Clothing Indus- Conditions of the Female Garment Workers in tries in Growth and Development Strategies.” the Capital City of Bangladesh.” International Investment and Growth Programme, Overseas Journal of Humanities and Social Science 4 (3): Development Institute. 173–79. Khosla, Nidhi. 2009. “The Ready-Made Garments Industry in Bangladesh: A Means to Reducing Chapter 3: The Genesis and Evolution of Better Work Highlights ᭤ Better Work is an ILO-IFC joint initiative aimed at improving working conditions for apparel workers. ᭤ Better Work started in 2001 as Better Factories Cambodia, which grew out of terms stipu- lated in the U.S.-Cambodia Bilateral Textile Trade Agreement of 1999. ᭤ Better Work was intended to leverage key strengths of the main stakeholders in the apparel industry in an attempt to arrive at a beneficial outcome for all. ᭤ Better Work now operates in eight countries (Bangladesh, Cambodia, Haiti, Indonesia, Jordan, Lesotho, Nicaragua, and Vietnam) and reaches more than 1 million workers in more than 1,000 factories. ᭤ How Does the Better Work Program Work? • Better Work addresses weak governance and low implementing capacities. • The program goes beyond monitoring and offers added-value services that help build capacity and create more cooperative work environments. • The program maintains cost effectiveness and promotes local ownership by employing mostly local staff to conduct factory assessments. • Transparency is a prominent feature of the program. 17 18 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector The Better Work (BW) program has its roots in the story of the evolution of the program using the Better Factories Cambodia (BFC) program. trade flows as a backdrop. Figure 3.1 shows U.S. The BFC program’s origin is often traced to the total apparel imports from Cambodia—both in Agreement Relating to Trade in Cotton, Wool, 2010 U.S. dollars and as a share of total apparel Man-Made Fiber, Non-Cotton Vegetable Fiber imports. The figure also shows six time periods and Silk Blends Textiles and Textile Products that mark important stages in the evolution of the between the Government of the United States of BFC program. The following paragraphs discuss America and the Royal Government of Cambodia, the six time periods in detail. otherwise known as the U.S.-Cambodia Bilateral Textile Trade Agreement in 1999. This section I Early Reforms discusses the antecedents and the early develop- Following decades of civil strife, Cambodia ment of the BFC program to provide context for embarked on an ambitious market-oriented the rest of the report. reform program. As shown in Figure 3.1, the United States imported almost no apparel from Genesis of Better Work: The Cambodia during the early 1990s. Cambodia was not a party to the global system of quotas known Cambodian Garment Industry and as the Multi-Fibre Arrangement (MFA), nor was Better Factories Cambodia it a member of the General Agreement on Tariffs Because the BFC program has its roots in the and Trade (GATT). As such, Cambodia was not U.S./Cambodia BTTA, it is useful to consider limited by quotas or other trade restrictions that Figure 3.1: Evolution of Cambodian Garment Exports to the United States .04 2.5 2 .03 Billions 2010 US$ 1.5 Share .02 1 .01 .5 I II III IV V VI 0 0 1990 1995 2000 2005 2010 2015 Year Billions 2010 US$ Share I. Early reforms II. Growth of apparel trade III. Negotiating the agreement IV. Early implementation V. End of MFA/new technology VI. Financial crisis and aftermath Source: Author’s calculation from U.S. import data. Note: Left scale=value of Cambodian garment exports to the U.S.; right scale=share of Cambodian apparel imports of total U.S. apparel imports. MFA=Multi-Fibre Arrangement. Chapter 3: The Genesis and Evolution of Better Work | 19 were part of the MFA. In this context, the gov- program aimed at improving working conditions ernment took steps to transform the state-owned in garment factories needed to be developed. apparel plants into exporters (Polaski 2006). And As Kolbin (2004) describes, there were six dif- in response to the signal of opportunity, foreign ferent program proposals, which fell mainly into investment began to flow into Cambodia from two groups. The International Labour Organiza- Taiwan, Hong Kong, the Republic of Korea, and tion (ILO) put forth the first proposal, which relied other East Asian nations. The growth, and perhaps on inspections by the Cambodian government. A even more the growth potential, also attracted substantial part of the ILO proposal, therefore, U.S. and European buyers (Polaski 2006). consisted of ways to improve the capacity of the Cambodian government’s labor inspectors. The II Growth of Apparel Trade ILO proposal focused mostly on working condi- tions that included wage payments, health and Not surprisingly, growth in investment and safety provisions, and industrial relations. It did domestic reforms resulted in rapid growth of not prominently feature core labor standards. apparel exports, which attracted the attention of The United States made a counterproposal for not only U.S. trade statisticians, but also of U.S. the program that focused on core labor stan- labor unions and government officials (Kolbin dards as well as compliance with Cambodian 2004). Because Cambodia was not part of the labor law. As such, the U.S. counterproposal World Trade Organization (WTO), the United had a greater focus on labor rights and, in par- States could impose tariffs and quotas to restrict ticular, freedom of association. The proposal the surge of imports. Along with the rise in exports also took a different approach to monitoring. came the voices of Cambodian workers who Instead of giving the Cambodian government complained of poor conditions and the inability the responsibility for monitoring, the proposal to effectively and freely organize. These calls for suggested that the ILO assume the monitoring help were heeded by U.S. and international labor responsibilities because the ILO was regarded unions, which in 1998 asked the U.S. government as an impartial, respected, and credible orga- to review working conditions in Cambodian nization whose reports would be accepted by apparel factories (Polaski 2006). all of the relevant stakeholders. In the end, the resulting program incorporated III Trade Agreement Negotiations features of both proposals. The program focused Negotiations—between the United States and on both Cambodian labor law and international Cambodia concluded with the January 20, 1999 labor standards. The ILO was identified as the signing of the trade agreement. The trade agree- monitoring body, but the program would build ment reduced Cambodian tariffs for U.S. apparel- domestic monitoring capacity by training and rely- related products—for example, textiles—and ing on Cambodian inspectors. The ILO was also established quotas for Cambodian exports to the tasked with providing assistance to build domestic United States. Quotas made conditions similar capacity in terms of labor laws and regulations. to those imposed on other developing countries One additional issue was the rules about through the MFA. Figure 3.1 suggests that the participation. There is nothing in the trade agree- rate of increase in U.S. imports from Cambodia ment that says that participation in the program slowed when the agreement became effective, would be mandatory. In fact, the program was which may be due to the quotas. implemented as a voluntary program. But since While the quotas were similar in spirit to the the voluntary nature of the program would give conditions faced by other apparel-exporting rise to a free-rider problem, the government issued developing countries, what was different was the Prakas (Ministerial Regulation) 108 on March 28, provision linking quota access to improvements in 2001, which made export permission (in the form working conditions. In particular, the agreement of access to the export quota) a function of regis- allowed for a possible 14 percent annual increase tering with the program. Whether due to Prakas in the quota allocation if the Cambodian govern- 108 or pressure from the Garment Manufactur- ment supported a program to improve working ers’ Association of Cambodia (GMAC), nearly conditions in garment factories. As a result, a all exporting firms registered for the program. 20 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Figure 3.2: U.S. Consumer Price Index of Apparel, 1990–2015 1.15 1 .9 Relative apparel price CPI apparel 2010=1 1.1 .7 .8 1.05 .6 1 .5 1990 1995 2000 2005 2010 2015 Year CPI apparel 2010=1 Relative apparel price Source: U.S. Consumer Price Index, U.S. Bureau of Labor Statistics. www.bls.gov. Note: The relative price series is the consumer apparel price index divided by the consumer price index for all urban consumers (all goods). IV Early Implementation Highlighting the important global changes in the apparel market during the first years of BFC, The BFC program began in January 2001, the Figure 3.2 shows the U.S. consumer price index beginning of phase IV in Figure 3.1. Note that (CPI) of apparel both as a raw index (the dotted the slowdown in the rate of increase in U.S. line) and relative to the overall CPI (the solid line). imports from Cambodia continued into phase IV These both show dramatically declining global as depicted in Figure 3.1. There are two possible prices of apparel. The raw index in particular explanations for this slowdown. The first is that drops sharply around 2000 and continues to be the agreement was discouraging U.S. imports low until the global financial crisis. from Cambodia. The second is that there were From Cambodia’s perspective, however, Fig- other changes in the world apparel market at the ure 3.2 shows that the absolute value of exports same time. As it turned out, China’s entry into the to the United States continued to rise. This sug- WTO in 2001 had a significant effect on the global gests the program included in the trade agreement apparel market. Furthermore, the restructuring was not discouraging trade. On the contrary, the of the apparel market meant that more and more GMAC noted that early on producers realized that countries that previously had barely participated Cambodia now had a comparative advantage in in the global apparel trade greatly increased their safe sourcing (Sibbel and Bormann 2007). productive capacity. Chapter 3: The Genesis and Evolution of Better Work | 21 The 2001–04 period was a time of evolution and standardized system. The change was signifi- and learning for BFC. BFC added a training com- cant because the system allowed factories to be ponent to help factory stakeholders (management monitored more carefully and gave monitors the and workers) collaboratively address working capacity to conduct full audits beginning in 2005. conditions issues in 2004. The ILO participated The timing of the new system was important in developing the Labour Dispute Resolution because 2005 was also the first year following Project, which evolved into the Arbitration the expiration of the MFA, which was expected Council Foundation. Cambodia also joined the to benefit larger, more established exporters at WTO in 2004. These moves were at least in part the expense of smaller exporters. Given that motivated by the belief that Cambodia was estab- low-income exporters such as Cambodia were lishing a comparative advantage in safe sourcing, latecomers to the textile industry, they were and the government wanted to strengthen that not subject to MFA export quota restrictions. position in preparation for the end of the MFA Therefore, they benefited from the quota system in December 2004. as it imposed limits on the amount of exports that larger markets could have. Consequently, it V The End of the Multi-Fibre was anticipated that the increasingly competitive Arrangement and Introduction trade environment would lead to a decline in gar- of New Technology ment exports and employment in relatively small In 2005 BFC convened the first Buyers Forum. countries like Cambodia because countries like This program recognized the important influence China could flood the market with their exports of international buyers (also known as “brands”). (for example, see Nordas 2003). Moreover, at the The main focus of the first Buyer’s Forum was to same time global demand for garment imports highlight the value of reducing the redundancy of began to decline starting in 2002. reports. Factories raised concerns about “audit These fears, however, were not realized. In fact, fatigue,” which forced factories to deal with many Figure 3.1 shows that, Cambodian exports to the often conflicting audit standards. By accepting a United States increased significantly. This increase common audit standard, such as the one used by was interpreted as support for the program’s focus the BFC program, factories could convey the same on safe sourcing. Others have suggested that the information about compliance with fewer audits, increase in exports after 2005 is not consistent generating significant savings and efficiency gains. with the idea that improving working conditions The original intent of monitoring was to iden- puts producers at a cost disadvantage. Even if tify issues within factories. Although the program costs increase, it is possible that improvements in did not provide advisory services at the time, it working conditions improve factory performance made factories aware of the issues identified in and make firms more competitive. Part of this may audits. Between 2002 and 2005, BFC monitors be explained by Cambodia remaining shielded returned to factories to conduct full assessments from fully free trade for another four years as and paid particular attention to following up on a result of safeguard measures imposed on its previously identified noncompliance issues. One major competitors, China and Vietnam. After result of this approach is that the variance on they were finally removed (in 2007 and 2008 for the compliance averages was very high. In other China and Vietnam, respectively), Cambodia was words, there was a lot of variation in the reports widely expected to lose its competitive advantage. coming back to BFC. VI Financial Crisis and Aftermath The relatively high variance of the reports raised concerns about how the data were collected and, The next phase of the program identified in Fig- especially, managed. As a result, BFC developed ure 3.1 starts in 2008. The 2008–present period a groundbreaking new data management system contains the kind of test that people expected called the Information Management System with the end of the MFA. In addition, BFC con- (IMS). Initially seen as an improvement in the tinued to evolve by adding an advisory services way data were collected and organized, the IMS program in 2008. The global financial collapse system laid the foundation for a more efficient represented a significant contraction of trade. 22 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Figure 3.1 shows the drop quite clearly. One to countries with less stringent labor regulations. of the concerns of this period was whether the However, the discussion that follows shows that impacted factories would opt out and leave for the Cambodian BFC experience dispels notions other countries—for example, Bangladesh—that of a “race to the bottom.” Instead, the value of may have been cheaper. As it turns out and as expanding Better Work beyond Cambodia is that shown in Figure 3.1, the crisis was relatively short- those countries may also be able to benefit from lived. Since the brief recovery, however, growth improved labor conditions in their apparel sec- to the U.S. market has slowed somewhat, making tors. This section also details the expansion and continued research about the program important. adaptation of Better Work to specific country contexts. Figure 3.3 depicts the geographical distribu- Better Work Today tion and years Better Work was established in Today the Better Work program, which has built each country. While the program is most active on the success of the BFC program, is a global in Southeast Asia, it has also been adopted in initiative operating in eight countries. Merk relatively minor apparel-exporting countries such (2012, 13) explains the thinking of key Cambodia as Jordan in the Middle East, Haiti in Central actors as the Better Work program expands to America, and Lesotho in Africa. other countries. Table 3.1 shows the scope of the BW programs in terms of the number of factories and workers The interviewees in this report all believe this is a each country program reaches. Cambodia is by significant development because it will help improve far the largest program in terms of the number working conditions throughout Southeast Asia and of factories (522) and workers (495,176). Viet- may help prevent companies from abandoning nam is not substantially smaller in terms of the Cambodian factories in favor of factories located in absolute number of factories (300) and workers regions where there is no monitoring system in effect. (384,228). None of the BW programs in Haiti, From the perspective of Cambodia, it is under- Jordan, Lesotho, and Nicaragua reach more than standable why some would fear losing business 50,000 workers because of the small garment Figure 3.3: Years Better Work Programs Established Source: Authors’ graphic based on data from Better Work Global Website. Chapter 3: The Genesis and Evolution of Better Work | 23 Table 3.1: The Reach of Better Work Cambodia Haiti Indonesia Jordan Lesotho Nicaragua Vietnam Totals Total number 522 27 106 60 16 26 300 1,057 of factories Total number 495,176 34,000 210,163 47,299 25,000 41,599 384,228 1,190,166 of workers Percentage 85 66 83 69 80 53 81 82 of women workers Note: Data obtained from the BW HQ in Geneva. They reflect actuals as of December 2014. Bangladesh is not included because the program has not yet begun carrying out assessment services. sector in these countries. Table 3.1 also presents A spark for the introduction of the BW program the percentage of workers who are women in to Vietnam may have been the onset of widespread BW factories. In Cambodia, Haiti, and Vietnam, protests. The number of strikes in Vietnam started women make up more than four of every five to rise steadily from 2005 and reached a peak in garment factory employees. Nicaragua is the 2008 with almost 800 strikes. It dropped in 2009 country with the lowest percentage of women because of the global economic crisis but, again workers (53 percent), yet more women than men increased in 2010 and reached a new high of 857 in work in Nicaraguan BW factories. The program 2011. Among manufacturing industries, garment as a whole reaches more than 1 million work- and textiles suffered most from strikes (Fair Wear ers (more than 80 percent of which are women) Foundation 2012). To safeguard the expansion across more than 1,000 factories. With the recent of the industry and to continue to attract invest- addition of Bangladesh, that number is expected ment, the government entered discussions with to increase dramatically. the ILO, whose Better Factories program, was Although the program expanded to each coun- being implemented in neighboring Cambodia. try based on particular contextual circumstances, Better Factories was seen as a viable model to it is worth exploring the stories of how and why replicate on a voluntary basis as politically and BW was established in two countries, namely, logistically, it would have been difficult to have Vietnam and Lesotho. a mandatory program. The voluntary program is also consistent with the market-based approach The Story of Better Work’s Expansion relying on the public-private partnership of the to Vietnam Better Work model. A number of contributing factors can help us to While buyers in particular were worried about understand why BW expanded to Vietnam. First, the strikes and called for action, they wanted the growth of the manufacturing industry in the more than just assessment. Rather, they wanted early 2000s meant that Vietnam was becoming BW to offer factories practical advice and support one of the most significant manufacturing hubs in to address the problems identified through the the region. If in addition to programs in smaller assessment process. The buyers had also previ- producer countries such as Lesotho and Jordan, ously paid for audits, which were so numerous the BW model could prove effective in Vietnam, that many of the factories never had time to make it would help establish BW as a program that was changes to their practices before turning their beneficial to large and small producers alike. Viet- attention once again to yet another audit. There- nam was an ideal candidate for the BW program fore, clearly part of the rationale of introducing because its apparel sector was relatively small the BW program in Vietnam was to eliminate the compared to Cambodia’s, but had a good base duplication of audits. to build from in terms of national law. The sector The BW program in Vietnam has since signifi- was also very important to the country’s economy. cantly evolved and now comprises 300 factories. 24 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector It also offers many different training modules Pike and Godfrey (2012) outline the context that have greatly helped workers to improve of the Lesotho apparel industry, which is essen- their professional and personal lives. Moreover, tially made up of a small set of East Asian- and the Vietnam program (together with the Jordan South African-owned factories. Without going program) was the real testing ground of BW’s into too much detail regarding the background approach built on moving beyond assessments of the apparel sector, we note that these two to offering comprehensive advisory and train- ownership groups moved to Lesotho for different ing services. reasons. The South African firms were attracted to Lesotho because it offered a nearby produc- tion site with much lower labor costs and less The Story of Better Work’s Expansion stringent labor regulations than in South Africa. to Lesotho The East Asian firms established their presence Given all the apparel-exporting countries around in Lesotho because of the incentives of the trade the world, why would the Better Work program governance regime. First, the MFA made Lesotho expand into a country as small as Lesotho? an option for countries that had already fulfilled The story reveals interesting insights into the their quotas and thus needed another location. give-and-take among the various stakeholders After the end of the MFA, the African Growth and to the impact of the broader global trade and Opportunity Act (AGOA) made Lesotho an environment. attractive option because of its privileged access Box 3.1: HIV/AIDS in the Lesotho Garment Industry HIV/AIDS is a serious problem in Lesotho, with a national prevalence rate of 23.2 percent, and the prevalence rate among garment workers estimated to be as high as 43.2 percent (ALAFA 2008). ALAFA—the Apparel Lesotho Alliance to Fight Aids, an NGO in Lesotho, has provided HIV/AIDS testing for factory workers in addition to training on safe sexual practices and other activities to raise awareness. Apparel workers have been well aware of ALAFA and have benefited from the organization for years. ALAFA and BW have tried to coordinate efforts to address the issue of HIV/AIDS in the workplace. In 2013 some apparel workers reported that there were some small adjustments in workplace practices, such as allowing short breaks for workers with HIV/AIDS who need to take their medications with food and water. To further understand the extent of training and awareness around the issue of HIV/ AIDS, apparel workers were asked whether their factories have an HIV/AIDS policy and whether there has been any awareness creation or training for workers related to the issue. Surprisingly, fewer people in 2013 than in 2011 report having an HIV/AIDS policy in their factories. However, more report that there has been some kind of awareness creation of HIV/AIDS. Though there is a decrease in the number of reported HIV/AIDS policies, a high number of factories still have such policies in place: 67 percent of non-BW factories compared to 85 percent of BW factories. Similarly, the amount of training/awareness creation related to HIV/AIDS for workers in non-BW factories is lower (80 percent) than for those in BW factories (90 percent). ALAFA recently closed due to funding problems. While BWL (Better Work Lesotho) is unable to take on all of of ALAFA’s tasks, they have incorporated some elements of safety and awareness regarding HIV/AIDS. Source: Pike (unpublished). Chapter 3: The Genesis and Evolution of Better Work | 25 to the U.S. market. Trade governance thus has had (CSR) in motivating buyers to make Lesotho a important implications for the Lesotho apparel priority country for sourcing, especially ethical industry. Since the end of MFA on January 1, 2005, sourcing. For instance, the Buy RED campaign Lesotho has witnessed a substantial decline in its launched by Bono in 2006 called on companies garment sector worker population: from a high of to produce products labelled with the Buy RED 53,000 workers in 2004 to 34,000 workers now.1 label and to then donate some percentage of their Because the Lesotho apparel industry is entirely profits to the Global Fund for AIDS, Malaria owned by foreign investors, the Lesotho gov- and Tuberculosis. Gap was one of the earliest ernment is in a precarious position in trying to companies to heed call and went a step further, maximize the developmental benefits of the sector. announcing that they would source their Buy Yet with the drawdown of East Asian firms, the Red products from Lesotho, a country plagued government is now trying to position itself more by widespread HIV/AIDS prevalence (Box 3.1). closely in the regional value chain. While this may In addition to interest from the buyers in help to make the industry more sustainable, it also introducing BW to Lesotho, there was consider- raises challenges with regard to labor standards able local support. The government of Lesotho given that they are what attracted South African and national employers’ organizations agreed to firms to the country in the first place. establish Lesotho as an ethical sourcing location Seidman (2009) sheds light on the significant in May 2006, as the country’s garment sector was role played by buyers in making Lesotho a BW reeling. They realized that they could no longer rely pilot country. In particular, she highlights the heavily on favorable tariff advantages afforded importance of corporate social responsibility to them under the MFA. The apparel manufac- turers’ association voted to create a compulsory program in October 2007, but the program never materialized. When assessment services began in 1 Phone interview with Better Work Lesotho office on March 19, March 2011, 15 factories enrolled in the program. 2015. Table 3.2 presents a timeline identifying the key Table 3.2: Timeline for Better Work Lesotho Date Event March 2006 World Bank and U.S. Trade and Development Agency fund a draft report “Corporate Social Responsibility in Lesotho’s Apparel Sector,” which concludes that Lesotho could follow in Cambodia’s footsteps in establishing itself as a “sweat-free” source country. May 2006 Action plan resulting from MFA forum entitled “Destination Lesotho: on the Road to Responsible Competitiveness,” followed by government and national employers’ organizations agreeing to the goal of establishing Lesotho as an ethical sourcing location. The plan recommends working with the Better Work (BW) program to help achieve this goal. August 2006 International Labour Organization and International Finance Corp agree to develop a global BW program with Lesotho as a pilot country. October 2006 First BW scoping mission. May 2007 Second BW scoping mission. October 2007 Apparel manufacturers’ association vote to create a compulsory program. July 2009 Third and final BW scoping mission. March 2011 Assessment services begin. October 2011 Trainings starts and Performance Improvement Consultative Committees and advisory services up and running. Source: BW Lesotho office and Seidman 2009. 26 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector events in the lead-up to BW establishing a pres- factories in particular, our review in Chapter 6 ence in Lesotho. concludes that the optimal human resource man- BW came up with several creative incentives agement (HRM) technology is often not known that the government could offer factories to per- or implemented across the board. Consequently, suade them to join the program—for example, pay there is room for technology-sharing, and BW’s 50 percent of first year fees, pay for trainings, and success can be seen as a vehicle for technology so forth—but the government never tested them. sharing (with HRM practices as the form of These incentives have been tested elsewhere, such technology in this instance). as in Jordan where the government subsidizes the Third, the program goes beyond solely moni- subscription fee based on the number of Jordanian toring to offer added-value services that help employees in order to promote local employment build capacity and create more cooperative work in the garment industry. environments. Such services are a crucial feature And while all BW factories receive advisory and of the BW programs, which set it apart from other assessment services, the BW Lesotho program has similar initiatives. also been able to arrange for all those factories Fourth, BW can be set up in a range of country to pay for at least one of the trainings they offer. environments. The program has proven to be As the BW Lesotho office has received positive functional in large countries like Indonesia as well feedback on these trainings, they will soon increase as in a small, fragile state like Haiti. Governments the price for training modules given that factories with different types of regimes and ideologies reported they would be willing to pay more for have also bought into the program. these services.2 Fifth, a particularly attractive feature of the BW model for key stakeholders is that it is cost effi- cient. Looking at the Cambodian model, Polaski Why Better Work Works (2006, 927) finds that the benefits of BFC come The history of the BW program in Cambodia, at relatively little cost. Vietnam, and Lesotho offers a general lesson The initial three-year monitoring project was funded about its model and the components required at $1.4 million. The U.S. and Cambodia govern- for successful implementation. ments contributed $1 million and $200,000, respec- First, Better Work addresses weak governance tively, and the Garment Manufacturers Association and low implementing capacities. Countries of Cambodia contributed $200,000. Spread over may sign on to treaties, trade agreements, and three years, with an average of 200,000 workers international code of conducts, but implementing in the sector, the average annual cost per worker those laws and policies, and specifically enforcing was $2.33, and the average annual cost per factory labor codes, are immense challenges for many was $2,333. These costs compare very favorably to developing countries that lack budgets, staff, and voluntary private monitoring schemes in the region, organizational structure. where the cost of factory inspections and certifica- Second, BW strikes a balance of incentives tion that a factory conforms to a buyer’s code of among the four main stakeholders in the apparel conduct can range as high as $10,000. value chain: buyers, factories, workers, and producing country governments. Effective Polaski explains that the cost-effectiveness of BFC enforcement is built on stakeholders’ distinct stems from the fact that it hires local monitors, at organizational strengths. As succinctly put by salaries that were quite attractive by Cambodian Wetterberg (2011, 65): “The BFC combines the standards, but very economical by international state’s regulatory power and the economic power standards. Moreover, the program retains a of buyers to ensure effective enforcement by project director with substantial international an independent monitoring organization.” For experience to ensure that local monitors are trained appropriately and adequate oversight is exercised over the program. 2 Phone interview with Better Work Lesotho office on March 19, Finally, transparency is a crucial element of Bet- 2015. ter Work, particularly in the assessment. Seidman Chapter 3: The Genesis and Evolution of Better Work | 27 (2009, 595) raises a regulatory conundrum that transparency still runs strong given that the audi- is relevant throughout BW countries: ence for BW assessments appreciates that there If workers’ jobs and the country’s economic liveli- will always be some level of noncompliance. An hood depend on defending a ‘sweat-free’ label, why example is the demand for the BFC program in would participants willingly reveal problems at Cambodia to resume publicly disclosing non- work, when to do so might undermine the industry’s compliance data, which has since been done. By appeal to global markets? maintaining transparency and by collecting data on compliance from a variety of sources, the BW Better Work attempts to address this concern program attempts to address concerns about any through transparency, which has been one of the possible regulatory bias that would result in over- most salient features of its program. Demand for reporting compliance. 28 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Tuoi’s story Age: 30 Years working in garment sector: 7 Tuoi’s life drastically improved since she made the move from working as a coffee farmer in Dal Lac province in the Central Highland region of Vietnam where she was born, to working as a sewer in a garment factory just outside of Ho Chi Minh City (HCMC). Together with her husband, who works in construction, they have been able to save enough money to purchase their own house where they live with their two children and her mother-in-law. Every morning, except for Sunday, Tuoi takes her six-year-old son to kindergarten at the factory where she works. The kindergarten is only one of several improvements that Tuoi mentioned when discussing how the Better Work program has helped to improve her quality of job and life. Other key improvements she identified included improved ventilation, better overtime allocation, and better safety procedures. She also spoke to the positive relationship she has with both her supervisors and colleagues. In terms of the impact of her job on her life at home, Tuoi said, “Since I have been working here, we have a better life. We discuss what to do, what to spend, and also what school to send our children to.” She was also grateful for having a happy family, with a husband who supports her, including helping with household chores. While Tuoi enjoys her job, she has ambitions to eventually open up her own tailor shop and wants to see her children continue their studies so that they can get jobs in finance or accounting. Commenting on her job and future plans, she said, “I really like this job. I really like the garment factory job. I plan to work here for a few years to save money to open a tailor shop of my own.” Chapter 3: The Genesis and Evolution of Better Work | 29 References Pike, Kelly, and Shane Godfrey. 2012. “Lesotho’s Apparel Industry: What is the Role for Better ALAFA (Apparel Lesotho Alliance to Fight Work?” Better Work Working Paper. http:// AIDS). 2008. HIV Sero-Prevalence Study betterwork.com/global/wp-content/uploads/ Report. http://www.academia.edu/9663503/ Session-8-Lesotho%E2%80%99s-Apparel- ALAFA_Apparel_Lesotho_Alliance_to_Fight_ Industry.pdf. AIDS_-_HIV_Sero-Prevalence_Study_Report. Polaski, Sandra. 2006. “Combining Global and Fair Wear Foundation. 2012. Country Study Local Forces: The Case of Labor Rights in Cam- Vietnam 2012. http://www.fairwear.org/ul/ bodia.” World Development 34 (5): 919–32. cms/fck-uploaded/documents/countrystudies/ Sibbel, Lejo, and Petra Bormann. 2007. “Link- othercountries/vietnam/CountrystudyVietnam ing Trade with Labor Rights: The ILO Better 2012march2014.pdf. Factories Cambodia Project.” Arizona Journal Kolbin, Kevin. 2004. “Trade, Monitoring, and of International and Comparative Law 24 (1): the ILO: Working to Improve Conditions in 235–49. Cambodia’s Garment Factories.” Yale Human Seidman, Gay W. 2009. “Labouring Under an Rights and Development Journal 7 (1): 79–107. Illusion? Lesotho’s ‘Sweat-Free’ Label. Third Merk, Jeroen. 2012. “10 Years of the Better World Quarterly 30 (3): 581–98. Factories Cambodia Project: A Critical Evalu- U.S. Bureau of Labor Statistics. U.S. Consumer ation.” Community Legal Education Centre Price Index, www.bls.gov. and Clean Clothes Campaign. http://www Wetterberg, Ana. 2011. “Public-Private Partner- .cleanclothes.org/resources/publications/ ship in Labor Standards Governance: Better ccc-clec-betterfactories-29-8.pdf. Factories Cambodia.” Public Administration Nordas, Hildegunn Kyvik. 2003. “The Impact of and Development 31: 64–73. Trade Liberalization on Women’s Job Opportu- nities and Earnings in Developing Countries.” World Trade Review 2 (2): 221–31. Chapter 4: Improvements in Factory Working Conditions Highlights Current evidence of improvements in factory working conditions Overall, Better Work (BW) programs have all been successful in improving working condi- L tions in factories, albeit at different rates of progress. Improvements are sustainable. The case of Cambodia shows that: (1) once investments L are made to improve working conditions, they are rarely reversed; (2) reputation-sensitive buyers encourage the factories they source from to be in greater compliance with national and international labor standards. However, important issues still exist, and the BW Program has not proven to be a panacea for all of the garment sector’s problems. Beyond compliance: New evidence of improved job quality Training and advisory services are key in changing the behaviors of factory workers and L management, which in turn improves job working conditions. While different training modules are offered across various BW countries, they all aim to build the capacity of key stakeholders to improve working conditions and factory productivity. BW advisory services help to create performance improvement consultative committees L (PICCs) in factories. PICCs are groups made up of an equal number of both management and union/worker representatives who meet regularly to discuss and resolve workplace issues. In our discussions with garment workers in Cambodia, Lesotho, and Vietnam, the benefits of the PICCs were widely heralded. Male and female workers benefit equally from improved working conditions, but experi- L ence it differently. 31 32 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector This chapter discusses some recent literature and and Scorse (2010) document an example of how uses new evidence to describe the link between outside organizations successfully pressured facto- the Better Work (BW) Program and improving the ries in Indonesia to improve working conditions. working conditions of factory workers. First, we What exactly are these conditions? In a rela- consider the initial conditions that characterize the tively early study of factory conditions in devel- factories in the countries in which BW operates. oping countries, Hall (2000) describes the very We find that although there is variation across the poor working conditions in Cambodian garment countries, many of them share common issues of factories. Hall documents long hours, inconsistent concern. Second, we describe general trends and payments to workers, unfavorable temperatures, patterns of compliance points (key components limited access to water and clean air, and abuse. of areas of labor laws and standards) that are In addition, independent unions in those factories assessed by BW. Third, we take an in-depth look faced many obstacles when attempting to orga- at the experience of Better Factories Cambodia nize. Those conditions attracted the attention of (BFC). Fourth, we briefly consider whether com- U.S. labor organizations and eventually led to pliance improvements benefit men and women the innovative U.S.-Cambodian Trade Agreement differently. Finally, we consider the advisory and that tied improvements in working conditions to training services BW programs offer in addition to quota access. This agreement led to the creation assessment in order to describe their relationship of the Better Factories Cambodia Program and with job quality within factory walls. ultimately the Better Work Program. Robertson et al. (2009) show that the conditions Hall (2000) describes are not limited to Cambodia. Initial Factory Working Conditions In fact, many, if not most, developing countries Working conditions across countries with different have a combination of these, or similar, issues in development statuses often vary. Factory work- factories. Furthermore, Robertson et al. (2009) ers in developing countries often experience low argue that these conditions are not limited to the wages, long hours, high temperatures, excessive garment sector. In fact, poor working conditions noise, poor air quality, unsanitary conditions, and are found throughout developing economies and abuse (both verbal and physical). These conditions may be worse in the informal sectors. have given rise to the concept of “sweatshop” conditions. Concerns over these conditions are How Better Work Measures neither new nor exclusive to developing countries Compliance (Powell 2014). First, it is important to understand how BW While having a long history of concern among assesses compliance at the factory level. Box 4.1 organized labor, poor working conditions have provides a detailed explanation of BW’s assessment helped generate support for the labor movement and reporting methodology for public synthesis in the United States as far back as the late 1880s.1 reports. In short, the program assesses compli- As globalization expanded in the early 1990s ance along two broad areas: national labor laws through an increase in production-sharing across and fundamental worker rights identified by the international borders, the working conditions of International Labour Organization (ILO). BW workers in developing countries began to receive offices train enterprise advisers to monitor compli- more attention. They are now at the center of a ance based on a list of more than 200 questions large and growing debate about globalization and divided into 38 unique compliance points and labor standards (Elliott and Freeman 2003; Brown 8 compliance clusters. The decision on whether et al. 2011; Locke 2013). Organized labor and a certain factory is in compliance on a specific NGOs have increased pressure on governments compliance point is straightforward: in individual to address poor working conditions, and some factory assessments, compliance is determined for have taken direct action themselves. Harrison each question, and there is no compliance score aggregated at the compliance point or cluster level. However, scores are aggregated by cluster 1 Upton Sinclair’s 1906 book The Jungle (Doubleday, Jabber & Company) raised public awareness about working conditions in for public synthesis reports, which summarize the the United States. See Arthur 2006. noncompliance rates across all visited factories Chapter 4: Improvements in Factory Working Conditions | 33 Box 4.1: Better Work Compliance Monitoring Methodology and Reporting Better Work carries out factory assessments to monitor compliance with international labor standards and national labor laws. Assessments are based on a comprehensive set of questions (generally more than 200 in total) that cover core labor standards and national labor law. Information is gathered through a variety of sources and techniques, including document reviews, observations on the shop floor, and interviews with manag- ers, workers, and union representatives. Better Work organizes reporting into eight areas, or clusters, of labor standards. Each of the eight clusters is divided into its key components. These components are known as compliance points (CPs), of which there are 38. Each CP contains specific questions that may vary from country to country. Four of the clusters are based on fundamen- tal rights at work regarding child labor, discrimination, forced labor, and freedom of association and collective bargaining. In 1998, member states, workers, and employer representatives at the International Labour Organization (ILO) identified fundamental principles and rights at work regarding these four issues based on eight widely ratified International Labor Conventions (29, 87, 98, 105, 100, 111, 138, and 182). These conven- tions provide the baseline for compliance with the fundamental rights clusters across all Better Work country programs. The four other clusters, which monitor compliance with standards primarily established by national law (and therefore vary from country to country) consist of compensation, contracts and human resources, occupational safety and health, and working time. In its factory and industry-level reports, Better Work highlights noncompliance findings. It reports these figures to help factories easily identify areas in need of improvement. Better Work calculates noncompliance rates for each factory and reports the data in individual factory reports. The noncompliance rate is reported for each subcategory, or compliance point, within a cluster. A compliance point is reported to be noncompliant if even one question within it is found to be in noncompliance. In public synthesis reports, Better Work calculates the average noncompliance rates for all participating factories in each subcategory. For example, an average noncompliance rate of 100 percent means that all participating factories were found to have violations in that area. Source: Better Work Vietnam 2014. Note: All BW Synthesis Reports start with this description of methodology and reporting. during that period and are typically published from six BW countries (Haiti, Indonesia, Jordan, every six months on the BW country program Lesotho, Nicaragua, and Vietnam).2 Appendix E website. Buyers can also purchase specific factory details the dates, numbers of factories and workers, compliance reports. General Patterns of Baseline Bangladesh is not included because at the time of writing this 2 report, synthesis reports had not yet been prepared. Cambodia is Compliance not included because the BFC methodology initially used is very different and thus not strictly comparable to BW programs. We Figure 4.1 presents an aggregate of the noncompli- compile BFC with other programs later in this chapter, but for ance rates reported in the first synthesis reports that we had to normalize the data points. 34 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Figure 4.1: Baseline Noncompliance across Six Better Work Countries Leave 24% Working time Overtime 59% Regular hours 51% Chemicals and hazardous substances 82% Emergency preparedness 87% Health services and first aid 87% OSH management systems 79% OSH Welfare facilities 94% Worker accommodation 23% Worker protection 98% Working environment 61% Contracting procedures 25% Contracts and HR Dialogue, discipline, and disputes 54% Employment contracts 57% Termination 20% Method of payment 12% Minimum wages Compensation 9% Overtime 21% Paid leave 40% Social Security 33% Wage information 45% Collective bargaining and collective 23% Freedom of association bargaining Interference and discrimination 21% Strikes 2% Union operations 46% Bonded labor 1% Coercion Forced 14% labor Forced labor and overtime 2% Prison labor 0% Gender Discrimination 18% Other grounds 51% Race and origin 3% Religion and political opinion 5% Child labourers 0% Child labor Documentation and protection 5% Hazardous work 2% Unconditional worst forms 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Authors’ calculation based on compliance data from the first synthesis reports of six Better Work countries (Haiti, Indonesia, Jordan, Lesotho, Nicaragua, and Vietnam). Chapter 4: Improvements in Factory Working Conditions | 35 and percentage of women workers covered in risk of losing their contracts with their buyers. these initial synthesis reports. Given the competitive environment, the loss of Based on Figure 4.1, it is clear that the occupa- such contracts may have long-term effects on tional safety and health (OSH) cluster is the area those factories. in which the highest rates of noncompliance are concentrated. Within that cluster, worker protec- tion is the compliance point (CP) with the highest Impacts of Better Work on Working level of noncompliance. On average, 98 percent Conditions inside Factories: of factories in the first synthesis reports across the six countries were found to be in noncompliance. Evidence from Compliance Data This CP covers questions such as: Do workers The literature suggests that Better Work may use the personal protective equipment that is be dealing with very poor working conditions provided? Are workers effectively trained to use to begin with, which highlights the enormity machines and equipment safely? Are standing of its task. Locke, Fei, and Brause (2007) raise workers properly accommodated? The welfare the question of whether or not monitoring can facilities CP is the only other CP to see an overall improve working standards. In this regard, moni- noncompliance rate of above 90 percent. This toring reports from Better Work are instructive CP includes questions regarding the presence of in terms of offering a clearer picture of what the clean toilets, quality canteens, and so forth. The main problem areas are at the beginning of BW discrimination along other grounds CP is another country involvement. area that exhibits a worryingly high rate of non- While looking at the baseline conditions in compliance across the six countries. This CP can which BW operates is useful, it is perhaps even include hiring practices with regard to disabled more useful to consider whether improvements workers, for example. Yet, when delving further in working conditions can be seen over time with into this issue, we find that the high noncompli- the BW Program. This section briefly compares ance rates can be attributed to the practice in compliance over time with the BW Program. several countries of having set quotas for hiring We first introduce overall trends and patterns of disabled workers. In those countries, quotas were working conditions across BW countries, and set at such a level that rendered it impossible for then consider country-level trends in depth using factories to be in compliance. In other words, there factory-level data to compare BW programs in were not enough disabled workers looking for Cambodia, Jordan, and Vietnam. jobs in the apparel sector. It is therefore impor- There is evidence that Better Work programs tant to treat the information from the graph with generally contributed to improved working con- caution. Moreover, this finding also underscores ditions among apparel workers. The most recent the fact that although public synthesis reports can impact briefs from Haiti, Jordan, Lesotho, and provide a valuable overview, their results need Vietnam all demonstrate a consistent trend where to be complemented with a detailed analysis of compliance improves over the number of factory specific compliance areas. visits. In Haiti, the three areas where working On a positive note, Figure 4.1 shows that even conditions improved the most are employment from the outset, BW factories do not exhibit contract, regular hours, and occupational safety widespread noncompliance with respect to ILO- and health management system (Better Work identified fundamental worker rights. For example, Haiti 2013). no factories in any of the first synthesis reports The impact brief for Vietnam identifies increas- were found to have child workers. One potential ing job security in BW factories, where between reason for this finding is that child labor is a “zero 2011 and 2012, the share of workers securing tolerance” point for buyers. Factories that are indefinite or open-term contracts increased by found to have children working face a very high 21 percent (Better Work Vietnam 2013). The 36 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector brief further mentions several OSH areas that Figure 4.2: Improvement and Problems have improved but where noncompliance still in Compliance Areas as Identified by remains high. For example, emergency prepared- Workers in the Lesotho 2013 Survey ness noncompliance has fallen from 76 percent 60 to 65 percent, yet many factories have poorly marked or obstructed emergency exits. Finally, the brief identifies four areas—overtime hours, 50 overtime wages, paid leave, and termination—in which compliance has remained static or actu- 40 ally declined. OSH compliance is of particular interest Percent because of high initial noncompliance rates across 30 countries and points. Trends from impact briefs in these four countries reveal that OSH is one 20 area that shows marked increase in compliance across all countries, with some notable variations 10 across countries. Factories in Lesotho achieved a sharp increase in all areas of OSH, and by the third visit, their compliance rate was almost 0 100 percent in all aspects of OSH. By contrast, SH R n e ns n B O H tio tim t io tio C despite some improvements over visits, by the nd a nsa g l a i n a a nd n e s pe ki rr rim A third visit, factories in Vietnam and Jordan still ct or t ra om W i so i sc FO n C r v D have compliance rates in OSH dimensions of C o pe around 20 to 30 percent. Specific details about Su improvements in OSH, highlighted by Better Improvements Problems Work (2014), are presented below: Source: 2013 Lesotho workers qualitative survey (focus • In Lesotho, 15 percent more BW factories group discussions). began conducting emergency drills between Note: Data points refer to the frequency that the 2011 and 2012. compliance areas were mentioned during focus group discussions. • Half of BW factories in Vietnam now provide CB = collective bargaining; FOA = freedom of association; HR = human resources; OSH = occupational safety and free health checks every six months. health • One quarter more workers have been given proper training in personal protective equip- each compliance area, as well as the number of ment (PPE) in BW factories in Indonesia since times they mentioned ongoing problems in each the introduction of the program. compliance area. Most survey respondents in Lesotho identified OSH as the most significant Compliance Before and After Better problem area in 2011 and the most significant Work in Lesotho and Vietnam area of improvement in 2013. Comments related Our primary data from Lesotho and Vietnam show to OSH accounted for just over 50 percent of all that occupational safety and health is the main feedback about improvements since BW Lesotho area in which workers notice improvements due to was introduced. Other key areas in which BW has BW. In her qualitative surveys with garment fac- made substantial impacts are contracts, human tory workers in Lesotho, Pike (unpublished) found resource, and compensation. In addition, Pike that health and safety is the area in which Better also found that these benefits accrue to both Work was able to effect substantial improvements; male and female factory workers, but that female however, workers were still most concerned about workers have gained relatively more. For example, health and safety. Figure 4.2 shows the frequency 69 percent of female respondents claimed they with which workers mentioned improvements in received PPE in 2013 compared to 41 percent in Chapter 4: Improvements in Factory Working Conditions | 37 2011. For male respondents, the rate increased Jordan, like Cambodia, has a trade agreement to 80 percent in 2013 from 69 percent in 2011. with the United States. This difference might be attributable to the types To compare trends in noncompliance, we begin of jobs that male and female workers perform by discussing how to calculate the overall non- in factories. compliance rates based on data from factories. Workers in Vietnam suggest that the impact of As mentioned, the Better Work synthesis reports BW can be attributed to changes in safety policy highlight noncompliance as a violation of any by factory management. Another factor they cite individual question within a category. Alterna- is their own greater awareness following their tively, here we take the simple arithmetic average participation in BW training modules. A female of noncompliance across all questions. factory worker in Vietnam commented: Figure 4.3 shows average noncompliance rates “Before joining BW and Life project,3 workers’ for Cambodia, Jordan, and Vietnam. What we awareness was low. For example, people working in can see clearly is that while the rates fall, there the bleaching units did not recognize or pay atten- is a worrying rise in noncompliance rates in all tion to the danger of chemical materials, petrol, or three countries in their most recent assessments. alcohol, so it was easy for them to have accidents. In addition, while these numbers tell us about Since they were trained in relevant topics, their the general picture, they also mask the specific awareness increased. dimensions of progress and concern as well as factors contributing to the trends. Box 4.2 explores —31-year-old female PICC member, BW factory, specific categories of compliance across the three Vietnam BW countries. Data from different sources support the conclu- sion that occupational safety and health is an area Figure 4.3: Overall Noncompliance over of working conditions that workers care about. Time and Country Moreover, it is an area in which BW appears to have made consistent progress across all coun- tries. Nevertheless, data also indicate that there .3 is further room for improvement and significant challenges in addressing this issue. .25 Comparing Noncompliance Patterns across Cambodia, Jordan, and Vietnam .2 The second set of analysis attempts to delve deeper into the factory-level data and carefully study the impact of the Better Work Program on compliance. .15 The analysis also incorporates historical events that have taken place in BW countries. Jordan and Vietnam have been selected here as comparison countries because they are arguably more compa- .1 rable than some of the other countries. Vietnam 2000 2005 2010 2015 is the closest to Cambodia geographically, and Visit year Cambodia Jordan 3 The Life Centre for Promotion of Quality of Life has a mission to Vietnam promote and enhance the quality of life of vulnerable people and communities by conducting research, training, and implementing cost-effective, sustainable and high impact programs. It imple- ments projects with garment factory workers as well. See more Source: Authors’ calculation from factory-level compliance at: http://life-vietnam.org/en/. data. 38 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Box 4.2: Specific Categories of Compliance To illustrate some of the differences across various categories, we focus here on four specific areas that are fairly comparable across countries, either because the questions used are fairly similar or because they cover similar aspects. The four comparable areas analyzed in this section are ambient conditions, safety, wage policies, and freedom of association and collective bargaining (FACB). Ambient conditions encompass air, tem- perature, water, and sanitation facilities in the factories. Safety covers machine safety and fire safety. Wage policies focus on three areas: contracts (e.g., whether contracts are in the native language, are written, and are understood by the workers), wages (e.g., paid on time and correctly), and overtime (e.g., measured and paid correctly). The last category, FACB, includes questions about the freedom of workers to join a union, man- agement attempts to interfere with unions, the presence of collective bargaining, and whether the collective bargaining agreement is followed. It is possible to analyze improvement in compliance over time using regression analysis. In particular, we estimate differences in compliance categories across countries by esti- mating a linear probability model. This regression estimates the effect of employment, share of female workers, visit number, time, and country on question-level compliance. The results are shown in Appendix A.1. Several interesting results emerge. First, and perhaps not surprisingly, having a Better Work (or BFC) Program increases compliance, which is consistent with improvements being linked to Better Work. Furthermore, compliance is higher in larger firms (when size is measured by employment). A higher female share of employment is also associated with higher compliance. Differences across the categories are statistically significant. Compliance with ambient standards, safety, and wage policies are lower than in other areas of compliance. Dif- ferences across countries are also evident. The results suggest that both Jordan and Vietnam have higher noncompliance rates than Cambodia, which is again consistent with the idea that time in Better Work or BFC is associated with increasing compliance. The main message from these results is that the definition of “sweatshop” varies across countries in the sense that different problems arise in different countries. In this regard, allowing for country-specific flexibility to deal with different problems is a strength of the Better Work Program. The Better Factories Cambodia which the program was initiated. The main prob- lem that the BFC model aimed to address was the Program lack of enforcement of labor standards. This is a The Better Factories Cambodia Program (BFC) crucial point in the Cambodian story; the issue has been operating for a long time and has been is not the lack of legislation, but rather the lack extensively studied. It provides a substantial of adequate enforcement. Sibbel and Bormann amount of evidence on how the program affects (2007) identify corrupt labor inspectors, close ties working conditions. Before delving into a literature to garment manufacturers, and the possibility of review, it is important to consider the context in losing jobs and foreign exchange if factories were Chapter 4: Improvements in Factory Working Conditions | 39 properly inspected as the main reasons inhibit- Better Factories Cambodia ing the government of Cambodia from fulfilling in the Literature its mandate to enforce labor standards. Kolben The BFC Program has attracted both criticism (2004) and Hall (2010) also cite corruption as and praise. A comprehensive 2013 report under- a key reason why the government of Cambodia taken by Stanford University’s International could not be trusted to effectively implement the Human Rights and Conflict Resolution Clinic labor code. Wetterberg (2011, 70) offers that while and the Worker Rights Consortium (WRC) the ILO was a strong proponent of labor rights, concludes that: it was unable to enforce those standards, “due both to its own ineffective enforcement structures during the eleven years of BFC’s operations in and the organization’s lack of jurisdiction within Cambodia, wages and basic job security have national borders.” Finally, international buyers had actually declined for Cambodian garment work- their own issues. They were accused of exploiting ers, and that other goals of the labor movement, workers in countries such as Cambodia and had particularly genuine collective bargaining between been unable to dispel these allegations through employers and workers and basic elements of their attempts at self-regulation (Locke, Fei, and occupational safety and health, continue to be Brause 2007). elusive. (pg. 99) Wetterberg (2011) explains how BFC rep- resents a successful public-private partnership There are certainly areas in which progress has (PPP), in which effective enforcement builds on been slow. Moreover, by focusing exclusively each partner’s distinct organizational strengths. on compliance points we may be overlooking In this case, the government of Cambodia lever- details regarding shortcomings of the BFC aged its regulatory power to effectively force Program in terms of not being able to impact factories to participate in BFC by making the certain key aspects that might affect job quality. process of obtaining export licenses contingent on For example, increasing wages is not within the BFC participation. In addition, “the ILO brings mandate of BFC. The idea here is that if BFC its ability to independently enforce standards expanded the scope of its work, it could help to the partnership” (Wetterberg 2011, 70), and to effect positive changes within the broader international buyers have effectively taken over environment. The example of Vietnam shows the role initially played by the U.S. government that this external impact does not need to be in using market power to leverage enforcement intentional. The performance improvement of labor standards. Many buyers have come to consultative committees (PICC) model in BW condition their purchases on acceptable moni- Vietnam factories was successful in this regard toring reports from BFC. As succinctly stated by as it compelled the government to introduce Wetterberg (2011, 65), “the BFC combines the a new labor code that obligated employers to state’s regulatory power and the economic power conduct social dialogue in the workplace (Better of buyers to ensure effective enforcement by an Work 2013; see Box 4.5). independent monitoring organization.” Overall, the literature suggests the effects of Given the uniqueness of the BFC approach, BFC are positive. According to Merk (2012, 27), Polaski (2004, 3) underscores the importance of “despite its shortcomings, the BFC is generally looking closely at the “BFC experiment,” as she considered an indispensable component of today’s calls it. She writes: Cambodian labor market.” While critics cite areas that require further attention, a positive way to [A]s policy makers search for effective ways to see the program is as Ama Marston of Realizing improve the governance of increasingly global Rights describes it: production systems and to realize more of the potential of private self-regulatory efforts, the While imperfect, the model set forth by the ILO Cambodia experiment offers new and successful monitoring project in Cambodia has created a methods that can be replicated, as well as important foundation for others to build upon as they begin analytical lessons. this process, providing a point of departure from 40 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector which they can innovate and evaluate their own compliance with labor laws. A case in point is Nike. efforts with a critical eye. (Hall 2010, 460) Nike’s return to Cambodia after the introduction of Chain Prasith, the Cambodian Minister of the program demonstrates its importance to inter- Commerce who negotiated the Bilateral Agree- national buyers. Nike lost confidence in Cambodia’s ment deal with Washington in 1999, explained the compliance in 2000 and began the process of pulling reasoning behind continuing to work to improve out of the country, but reentered Cambodia in 2002 labor standards post-2001, when the favorable after the ILO began the labor monitoring program trade incentives were no longer in effect: and government officials and contractors promised greater labor compliance (Hall 2010, 441). We are extending our labor standards beyond the end of the quotas because we know that is why we Impacts of BFC and Spillover Effects continue to have buyers. . . . If we didn’t respect the When considering overall trends in compliance, unions and labor standards, we would be killing the one of the concerns is that the changes in compli- goose that lays the golden eggs. (Hall 2010, 442) ance, particularly in Cambodia, may be due to the The value of the BFC Program, as several authors entrance of new firms that are less compliant on find through empirical research, is a key reason average. Figure 4.4 shows changes in compliance for the limited impact that the end of quotas had by visit number over time. Specifically, the figure in Cambodia. Cambodia offered Western buyers a shows three lines. The solid line shows the first visit sought-after niche: independently verified substantial noncompliance rates. The first visit noncompliance Figure 4.4: Noncompliance by Visit Number over Time in Cambodia .3 Non-compliance rate .15 .2.1 .25 2000 2005 2010 2015 year First visit Second visit Third visit Source: Authors’ calculation from factory-level compliance data. Chapter 4: Improvements in Factory Working Conditions | 41 rates can be thought of as baseline rates since they resilient to changes in the structural conditions of are the ones that have the least direct exposure the apparel market. Moreover, the authors posit to the BFC Program. The first visit compliance that public pressure matters. They identify a sig- rates may indicate evidence of spillovers in the nificant break in factory-level behavior following sense that if new and potential firms are learning the BFC policy change in 2006 related to public about higher standards for compliance, they would disclosure of factory-level working conditions. enter the program already having made progress This finding confirms the fears and concerns of on compliance. The solid line is falling over time many researchers and activists alike who wanted and then rises near the end of the sample, which the program to revert to its original model of suggests that there may be a growing culture of transparency. In 2014 the program reversed its compliance that informs the working conditions policy and reinstated the original transparency of the new factories, which could be an indirect policy and even went a step farther, launching effect of the BFC Program. This observation may an online transparency database4 showing how suggest that as new factories learn about compli- individual garment factories perform in terms of ance, they become more compliant when they key working conditions. enter the program than in the past. In an earlier paper Robertson et al. (2011), The broken line (long dash-dot) shows compli- focusing on the period after the 2006 public ance at the third visit. The difference between disclosure policy change, studied variations in the first and the third visits (shown by the compliance of firms according to their buy- distance between the first and third visit lines) ers’ reputation. They found that factories with may be one way to describe a direct effect of reputation-sensitive buyers still continued to the BFC Program. In particular, the differences improve compliance, but at a decreasing rate. between the solid and the broken line show the Compliance rates actually declined for factories average improvement in the factories between that did not supply reputation-sensitive buyers, the first and third visits. The effect is greatest although noncompliance rates never reached initial in the beginning and end of the sample, but baseline levels. These results show that the pres- is somewhat muddled during the middle time ence of a reputation-sensitive buyer does make period in which the BFC Program reversed its a difference and that the BFC policy change led public disclosure policy. to less overall compliance than under the initial system that entailed publishing the names of Sustained and Uniform Factory Compliance noncompliant factories. The rise in noncompliance during some periods Despite various external factors that would raises the question of how often firms reverse seemingly challenge the BFC Program, Rob- previous improvements in working conditions. ertson (2011) declares the program successful Brown, Dehejia, and Robertson (2012) conclude in achieving its goals of improved working that improvements in labor conditions are rarely conditions. He finds that working conditions reversed. They use two definitions of retrogres- continued to improve, although at a decreas- sion: a change from being compliant to being ing rate, post-2005 after the conclusion of noncompliant or a change from noncompliance the Multi-Fibre Arrangement (MFA) when to compliance and then back to noncompliance. unit prices of apparel dropped. Moreover, Using these definitions, they find that retrogression Robertson finds that in addition to work con- rates are overall quite low, even when market- ditions, wages, especially those of women in access incentives are diminished. That is to say the apparel sector, also improved over the that once garment factories begin the process 10 years of the program he studied. of improving labor standards, they are highly Warren and Robertson (2011) find that unlikely to reverse course. This is particularly foreign-owned factories tend to be more compli- true where costly investments have been made ant than locally owned ones. This contradicts the to improve the work environment. Therefore, the improvements in labor conditions that the BFC Program has helped bring about are largely 4 Available at: http://www.betterfactories.org/transparency/. 42 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector contention that higher wages in foreign-owned attention, on September 7, 2011, BFC declared firms compensate workers for worse working it would work with 24 international clothing conditions. Yet it is important to note here that brands and launch comprehensive investigations 95 percent of their sample is foreign-owned, into the precise causes of fainting among factory which reflects the fact that the Cambodia apparel workers. This problem is one of both nutrition industry is largely foreign owned. This suggests (malnutrition, dehydration, and food poisoning) that compliance rates are not uniform across and working environments (inadequate ventila- factories, especially between factories in terms tion, noxious chemicals, and long work hours) of whether they are locally or foreign owned. (Labour Behind the Label and Community Legal After carefully examining BFC factory-level Education Center 2013). Despite modest improve- reports, Rossi and Robertson (2011) find that, ments, the industry continued to witness a high on average, compliance increased across visits. number of faintings, which prompted the Labor Their paper further analyzes changes in industrial Ministry to form a committee in August 2014 relations, focusing on specific indicators, such to investigate the cause of these faintings (HRW as shop stewards and liaison officer indicators. 2015). Furthermore, partially as a response to Their analysis suggests that BFC’s monitoring and fainting instances and their potential relation- advisory services aimed at remediation have been ship to nutrition issues, BFC, with support from instrumental in creating an open environment for the Agence Française de Développement (French improved industrial relations. In turn, improved Agency for Development—AFD), has undertaken industrial relations, exemplified in this case by a large-scale longitudinal study on the impact of improved communication between management food provision in factories on workers’ health and workers, have led to improvements in crucial and productivity.5 aspects of working conditions and workers’ well- Unwanted Overtime. Human Rights Watch being, such as occupational safety and health, (HRW 2015) identifies that working unwanted wages, working time, and weekly rest. Rossi and overtime remains a serious issue. Cambodia’s Robertson (2011, pg. 20) conclude: labor law limits weekly (beyond 48 hours) over- Ten years on, the experience of BFC has shown that time work to 12 hours (2 hours per day). And such an innovative and ambitious project, based although workers generally preferred working on the principle of social dialogue among national some overtime to supplement their incomes, and global stakeholders, can deliver significant they complained to HRW officials that factory improvements in industrial relations. managers threatened them with contract non- renewal or dismissal if they sought exemption Lingering Problem Areas from doing overtime work demanded of them. There may be more problem areas than we The 2015 Cambodia Apparel Worker Survey focus on here, but the three areas of concern provides quantitative empirical evidence on this presented here (fainting, unwanted overtime, and issue. Although this problem exists, about two- repeated use of short-term contracts) provide good thirds of workers reported that they have never insight into the remaining challenges to achieving been asked to perform unwanted overtime over greater job quality for garment factory workers the past three months. in Cambodia. Repeated Use of Short-Term Contracts. Fainting. The high-profile phenomenon of Employers are increasingly signing workers to workers fainting in groups of up to 300 at a short-term contracts lasting three or six months, time in Cambodian garment factories was widely which critics say allow them to easily terminate publicized in 2011 (Labour Behind the Label workers if they join unions or seek bonuses or and Community Legal Education Center 2013). maternity leave benefits. An April 2013 BFC Yet, there have also been many instances of fainting occurring in small numbers. Incidences range from dozens to several hundred workers 5 ILO. 2013. RFP N° 01/2013. Cambodia Study on the Implications of Food Provision on Garment Worker’s Health and Productivity. at a time, with 2,400 workers fainting in 2011 http://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/ alone (Merk 2012). With this increasing media documents/newsitem/wcms_220132.pdf Chapter 4: Improvements in Factory Working Conditions | 43 report said that 90 percent of the newly registered permitted to flourish. In interviews with union factories it assessed indicated that all of their work- federation officials, HRW (2015) was told that ers are on short-term contracts (O’Keeffe 2013). registration for most independent unions in the The labor law states that factory managers can garment industry remained effectively stalled as issue short-term contracts and renew them one of January 2015, largely due to onerous certificate or more times for up to two years (HRW 2015). requirements. This practice, if done beyond two years, is not Lack of Coverage of Subcontracting Fac- only illegal but also seriously threatens workers’ tories. Smaller subcontractor factories, which rights. HRW (2015, 42) found that: largely fall outside the purview of BFC,7 often workers repeatedly hired on short-term contracts exhibit even worse working conditions than the or on a casual basis are more likely to experience factories monitored by BFC (Stanford University the labor abuses documented in this report. They and WRC 2013). HRW (2015) also corrobo- have a lower likelihood of redress and are at a rates these findings, concluding that working greater risk of experiencing union discrimination, conditions are typically worse in subcontractor pregnancy-based discrimination, and denial of factories than in larger export-oriented factories. maternity benefits and sick leave. More specifically, they are more prone to casual hiring and it is harder for their employees to Shortcomings unionize. While understanding that the program cannot be Lack of Enforcement Power. The BFC’s successful in a vacuum, it needs to continue to mandate is to expose labor rights violations, but link its monitoring, training, and advisory func- it remains largely powerless in enforcing penalties tions within factories with the broader external on those in violation. In addition to supporting environment. This section considers the main factories in remediation and prevention through shortcomings of BFC as identified in the literature training and advisory services, the program relies in terms of limited program impact: challenges on the government and buyers’ leverage to compel faced by independent trade unions, lack of cov- behavior change. Moreover, in the assessment erage of subcontracting factories, and lack of process BFC may be creating unrealistic expecta- enforcement power. tions and thereby damaging its own credibility. Challenges faced by Independent Trade Merk (2012) reveals that interviewees, both union Unions. Rossi and Robertson (2011) elaborate representatives and general workers, expressed on the limitations of the BFC Program as they frustration with the BFC’s lack of ability to do relate to industrial relations. They argue that BFC anything about violations. This even led one inter- monitoring activities focus exclusively on the viewee to claim that: “we no longer inform the workplace and thus on employers’ behavior rather BFC because it can’t do anything.” In this regard, than monitoring the behavior of other industrial while it may be commendable that the BFC offers relations actors. This means that although compli- workers a way to express dissatisfaction, the result ance with checklist questions concerning strikes may be negative if complaints fall on deaf ears. was 97.5 percent, union behavior may not be Areas of Improvement adequately captured by BFC. Nevertheless, as part of its Public Disclosure initiative, BFC also Clearly, all the areas of lingering concern and covers unions’ compliance with legal requirements shortcomings alluded to above cannot be rem- related to strikes.6 edied by BFC alone. Next, we summarize from Hall (2010) recognizes that BFC has won the literature, recommendations for actions that important battles in its factory-level campaign the key stakeholders can take to help ensure that for labor rights, but cautions that the war will the full potential of a program such as BFC is be lost if truly independent trade unions are not realized, and ultimately so that the job quality 7 Factories with export licenses are required to participate in BW. 6 Better Factories Cambodia. Transparency Database: Union Subcontracting factories that do not need the license are not Compliance List. http://betterfactories.org/transparency/en/ required to participate in BFC. A few subcontractors, however, factory_strikes/view. have voluntarily chosen to join the program. 44 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector of garment factory workers is enhanced as much project: the Worker’s Education Assistance to the as possible. Cambodian Trade Union Movement. This helps Sanction Labor Rights Violations More to address trade union concerns that BFC may Severely. Hall (2010) argues that the benefits be serving as a substitute, rather than a comple- of BFC are fragile and temporary if they are ment, for union activity. Furthermore, the ILO’s not linked to broader judicial enforcement and Labour Dispute Resolution Project has worked protection. The BFC Program may be important with unions and employers since 2003 to encour- in terms of exposing labor rights violations, but age collective bargaining in the industry and has it is in the purview of the government to ensure established the Arbitration Council, a Cambodian that factories are held accountable. Merk (2012) independent national institution for labor dis- identifies a need for the Cambodian government pute resolutions. The Council is integrated into to increase sanctions on those in violation of the country’s industrial relations, having been labor laws. established in cooperation with the Ministry of Labor, employers, and trade unions. In this regard, Obtain Buyers’ Financial Commitment to it is important that the BFC Program work with the Program. The BFC Program could be signifi- other complementary initiatives to ensure that cantly improved by taking into account the influ- aspects of freedom of association and collective ence that buyers could have in the establishment bargaining (FACB) that are not strictly covered of basic working conditions. Specifically, buyers by their factory assessments are not neglected. must commit a larger financial contribution to the BFC Program, and the BFC Program should Invite Subcontracting Factories to Join the ensure that buyers take more seriously resolutions Program. A few subcontractors have voluntarily resulting from Buyer’s Forums (Merk 2012). chosen to join the program, but these are the Oka’s (2010b) empirical analysis highlights the exception rather than the rule. Estimates of the important role of buyers in helping to improve precise number of subcontracting factories differ, compliance. Oka identifies a significant negative ranging from 300 to 3,000. What is clear is that association between the number of more or less they tend to be smaller than registered factories reputation-conscious buyers and noncompliance. (Merk 2012). Given that subcontracting factories The gap in compliance performance appears to fall largely outside the purview of the BFC, the stem from reputation-conscious buyers’ tendency program should work to identify factories that to rigorously regulate supplier-compliance perfor- use subcontractors and actively entice those mance through pre-order selection and post-order facilities to join the program. While identifying enforcement, both reactively and proactively. Oka key violations in subcontracting factories through concludes that while reputation-conscious buyers assessment is important, BFC training and advi- help to improve labor standards, governments sory services to help remediate problem areas are and NGOs still have a significant role to play. just as significant. In this regard, BFC could, for Moreover, as explained by Polaski (2004), example, cooperate with the Ministry of Labor international buyers stand to benefit greatly from and Ministry of Commerce to obtain the names the program as they gain reputation-risk insur- of subcontracting factories (Merk 2012). ance without paying a premium. Therefore, they Not a Panacea, but a Good Start could be much more active in providing funding for BFC operations, which would also help to Taking into account the above discussion, it can ensure BFC’s long-term stability. be said that while BFC Program has not proven to be a panacea for poor working conditions in the Empower and Protect Independent Trade Cambodia garment sector, its introduction to the Unions. The BFC Program needs to do more country in 2001 has helped initiate noteworthy to protect freedom of association by continuing improvements in working conditions. The 2015 to empower and protect trade unions. To some Cambodia workers survey also confirms the extent, the BFC encourages the development and positive impacts of BFC on working conditions, strengthening of industrial relations between particularly among factories that receive services social partners in collaboration with the ILO’s from BFC (see Box 4.3 for more findings from Chapter 4: Improvements in Factory Working Conditions | 45 Box 4.3: What Do Our 2015 Data Tell Us about the BFC Program in Terms of Compliance? The 2015 Cambodia Apparel Workers Survey confirms earlier findings on the impact of BFC on working conditions. Appendix Table A.5 summarizes our survey data from Cambodia in terms of assessing workers’ perceptions of compliance. It shows that more than half of workers received OSH training, and almost all workers report that their factories have a health and safety committee. Slightly fewer workers, however, report having a health and safety policy. In terms of contracts, 71 percent of respondents have a fixed-term contract, 80 percent have had their contract explained to them, and 88 per- cent have signed a contract. Although the relative percentage of men and women who have fixed-term contracts is similar, a higher percentage of female workers have signed contracts and have had their contracts explained to them. When workers were asked “how often were you asked to work overtime when you did not want to over the past three months?” about two-thirds reported that it had never occurred. Still respondents reported working long hours, on average about 58 hours per week. The working hours do not differ across factory category. On a positive note, workers almost universally (over 90 percent) reported that they received leave whenever they asked for it. Awareness of the existence of the BFC Program is low among workers. Only about 36 percent of workers have heard of the BFC Program, and both male and female work- ers appear to be equally aware or unaware of the program. Across types of factories, as expected, workers in factories in service category C, who receive a full package of services from BFC (assessment, advisory, and training), are most aware of the BFC. Among workers who know BFC, workers in factories that receive some services from BFC (category B and C) reported that their working conditions had improved more than those of their peers in factories that only receive assessment services. Among workers who said that there have been improvements in their factories, most identify the most significant area of improvement in terms of safer and healthier workplaces. Again, work- ers in category A factories have not experienced this improvement to the same extent. Despite high rates of satisfaction with OSH, women’s satisfaction with OSH is consider- ably less than that of male workers (85 percent compared to 95 percent). the survey). In the spirit of keeping the benefits training and outreach, while being able to provide of BFC in perspective, Berick and Rodgers (2008, credible documentation of factory specific and 76) conclude that the BFC Program “has set in industrywide gradual improvements in labor con- motion a process for improving working condi- ditions over time. tions in the garment sector and has achieved modest improvements in working conditions.” In addition, Hall (2010) documents the benefits Beyond Compliance various actors have gained from the BFC Program Part of the innovative approach of the BW model by describing them as follows: is that it goes beyond monitoring to also offer- As operated under the ILO, the program appears ing advisory and training services. Although the to have generally benefited all stakeholders— impacts of these services are harder to pinpoint, management, labor, and buyers—by increasing we attempt to analyze our primary data in terms transparency, fostering cooperation, and providing of going beyond compliance to consider the effect 46 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector of BW’s services on job quality. Compared to Performance Improvement assessment services, very little research has been Consultative Committees done on advisory and training services. In this In our Lesotho research, we found that the PICC regard, our study hopes to help fill this gap in was widely heralded as an important mechanism in the literature and perhaps even encourage further helping to address complaints and improve com- research on these services. munication between workers and management. The following section will explore these two Workers were especially positive in their feedback particular services of BW, which go beyond strict about the role of the PICCs in improving health assessment, establishing performance improve- and safety conditions. Through PICCs, they are ment consultative committees (PICCs) and offer- able to raise their specific health and safety con- ing training. At the start of advisory services, BW cerns, which are heard by union and non-union helps to create PICCs in factories. The PICCs worker representatives, manager representatives, are groups made up of an equal number of both as well as an enterprise adviser from Better Work management and union/worker representatives Lesotho (BWL). Workers felt that this has been who meet regularly to discuss and resolve work- an effective method for achieving improvements place issues. in health and safety. Similarly, in Vietnam, the Different BW offices offer various trainings but PICC model has been successful in improving the in general the trainings target workers, supervisors, relationship between workers and management and senior management in an attempt to address (see Box 4.5). the specific needs of each group (Box 4.4). In addi- In Lesotho, a major source of concern for tion to trainings that correspond to compliance workers has been the relationship they have areas, the training modules are also designed to with their human resource (HR) managers (see more broadly improve working conditions and Table 4.1). While the HR office is intended to build capacity. serve as a medium through which workers can resolve their workplace disputes, prior to going to the HR office, workers are expected to be able to raise workplace issues with their line supervisors, in part to prevent issues from becoming disputes. Box 4.4: Training Modules However, in 2011 workers reported that there Offered by Better Work were major roadblocks in both of these areas, • Workplace Organization making it difficult to have their voices heard and, • Compensation and Benefits more importantly, their issues resolved. However, in 2013 workers reported many improvements in • Supervisory Skills Training this area; in fact, it was one of the most frequently • Training of Trainers induction for raised topics when discussing improvements since workers the introduction of the Better Work Program. Primarily, these improvements had to do with • Workplace Cooperation process—how issues can be raised, how they are • Labor Law Guide resolved—and widened channels of communica- • Negotiation tion. Workers also spoke about feeling free to talk to their HR and factory managers since the • Occupational Health and Safety introduction of Better Work. • Quality “BW has helped me open communication channels • Productivity between me, my supervisors, and my managers. • Worker Training Because when I have a problem, I’m free to go to the office and discuss them.” —Male sewer from BW factory; worked in factory Source: BW Vietnam. for 3 years, Lesotho Chapter 4: Improvements in Factory Working Conditions | 47 Box 4.5: The Success of the PICC Model in Vietnam • Better Work Vietnam has seen that factories with performance improvement consul- tative committees (PICCs) are much more likely to attempt negotiation before strikes occur. As a result, the number of strikes in Better Work factories is significantly lower than the industry average. • According to the 2012 Vietnam General Confederation of Labor (VGCL) study, the PICCs not only helped improve industrial relations, but also helped to strengthen trade unions overall. • The model of PICCs in Vietnam has had such a profound impact on the country that it has inspired a change in the labor law. In 2013 a groundbreaking change was made in the Vietnamese labor law, which now calls for worker/management committees in all enterprises to serve as a mechanism for social dialogue. Source: Better Work (2013a). Table 4.1: Lesotho: Worker-Management Relations, 2011 versus 2013, in Percent Factory manager HR manager Line manager Supervisor 2011 2013 2011 2013 2011 2013 2011 2013 Very bad 11 7 7 20 10 22 n/a 15 Bad 16 38 11 31 10 31 n/a 41 Neutral 17 21 28 12 19 13 n/a 13 Good 32 30 34 27 37 31 n/a 29 Very good 24 4 20 10 24 2 n/a 2 Source: Lesotho Workers Survey 2011 and 2013 rounds-quantitative data. Note: Data about supervisors were collected only in 2013. While some workers may perceive the PICC as “PICC solve the issues quicker. They had stronger a substitute for HR, in fact, the two should work voices than workers’ and more effectively put together. Yet it appears that some workers think improvement suggestions into operation.” it is an alternative forum for filing grievances, —35-year-old male technical worker, BW factory, which could potentially perpetuate a problem- Vietnam atic relationship with HR managers. Therefore, a combination of both strategies—allowing the PICCs to serve as the main in-house grievance Training procedure and training HR managers—may be In 2011, the issue of supervisor relations was an effective option. As part of allowing the PICCs central to workers’ concerns about compliance to serve as an important grievance function, they with labor standards and basic working conditions should continue to be developed in each of the in Lesotho. Table 4.1 summarizes how workers factories. Workers have found the PICCs to be felt, in 2011 and 2013, about their relationship valuable, particularly in the area of raising and with factory managers, HR managers, line man- resolving workplace issues. The experience of a agers, and supervisors. Of great concern is that worker in Vietnam illustrates this: their feedback suggests that worker-management 48 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector relations are deteriorating in Lesotho. This appears In trying to better understand the reach of Better to be occurring at all levels of authority (from fac- Work trainings, we asked Cambodian garment fac- tory manager all the way down to supervisor). In tory workers what types of training they received. 2011 workers complained that supervisors lacked The most popular type of training had to do with interpersonal skills, were rude to subordinates, OSH. About 100 (out of 565) workers received and practiced favoritism in deciding who gets OSH training. There is no difference between male promoted, who gets blamed for mistakes, and and female workers in terms of receiving training who is assigned the easiest tasks. Despite some in OSH. However, the data show that workers in minor improvements in this area, in 2013 the factories receiving advisory, in addition to assess- majority of workers did not notice significant ment, services are much more likely to be trained improvements; on the contrary, they complained (21 percent) compared to those working in facto- that it is an ongoing issue. ries receiving only assessment services from BFC According to information from BW Lesotho, (14 percent). Primary data from Lesotho reveal that not all factories received supervisory training, the percentage of workers trained in OSH doubled which partially explains the findings. One could from 13 percent in 2011 to 26 percent in 2013. also argue that the supervisory skills trainings have Although this number is still low, it is interesting not had the same kind of impact as the PICCs to note that women were more likely to receive because of the difference in how they function. such training than men; in 2011, 28 percent of men Supervisors receive training and return to the and 9 percent of women received OSH training shop floor to either implement or ignore the skills compared to 16 percent of men and 29 percent they have acquired. The PICC is a more interac- of women in 2013. tive experience with multiple representatives, Another training that workers in Cambodia often holding workers and supervisors accountable received was related to production, especially when to one another. Additionally, unlike trainings the factory is making a new design, although this that may take place once a year, the PICCs are is not relevant to our study. The survey results also ongoing. Our research in Vietnam allowed us revealed that very few workers received training in to hear directly from the supervisors. Many of life skills, an area that we would highly recommend them worked their way up to the supervisor level giving more attention to given potential multiplier and thus have some level of appreciation for the effects. The impact of training on workers’ lives workers they supervise. outside factories is discussed in Chapter 5, but here “I was a worker at first and worked all the way up it is worth citing data from a Better Work (2015) to the current position, so I understand workers research brief on training effectiveness, which very well and care for them.” found that 85 percent of workers acknowledged that training impacted their lives outside the fac- —50-year-old female supervisor, non-BW factory, tory. Thus, even in the absence of training tailored Vietnam to life skills, training modules offered by BW can Yet, the supervisors were also frank in detailing have a meaningful impact beyond the factory floor. the struggles they have in communicating with workers. One supervisor in particular made a A New Better Work Model profound statement: Emphasizing Advisory and Training Services “Workers sometimes do not listen to managers’ words/instructions or make technical mistakes Recognizing the value of training and advisory and because of the work pressure so I sometimes services, Better Work is now implementing a quarrel with workers or say crude things to them. new model, whereby advisory services will be But a few minutes later, I cool down, then come to provided as a first step before anything else.8 them, smile, and reconcile with them.” —41-year-old female supervisor, BW factory, 8 The information on the new approach, summarized here, is Vietnam detailed at: http://betterwork.org/global/?page_id=7380. Chapter 4: Improvements in Factory Working Conditions | 49 The new process involves offering factories remuneration and relationships with supervisors) one-on-one coaching sessions with BW expert for all workers exposed to BW Vietnam. advisers. Moreover, the new model will give factories a number of training days, the topics Job Satisfaction of which will be decided upon by the PICCs and Through qualitative and quantitative research, expert advisers based on the specific needs of a we aimed to delve deeper into this issue, under- particular factory. Another unique aspect of the standing that although surveys and especially new model is that staff from different factories focus group discussions can be very instructive, will participate in learning seminars so that they they must be interpreted with care given the small may learn from one another. The initial 100-day sample size. period also entails a process whereby factory man- The 2015 Cambodia Apparel Worker Survey agement and worker representatives set goals for with more than 500 workers shows that men and themselves and work on improvements before an women both share high levels of overall job satis- external assessment is carried out. It is only after faction. When probed about level of satisfaction this 100-day period has elapsed that Better Work with their working conditions, about 55 percent will begin formally assessing factory compliance. said that they are satisfied, and about 9 percent Another key innovation is that now factories will said that they are very satisfied. Table 4.2 shows submit their own progress reports to buyers by the breakdown by sex, and we find that women using a BW template and the self-diagnostic tools seem to be more satisfied with their working they have developed. Later, BW will complement conditions, with only 7 percent expressing dis- the factories’ own progress reports by issuing a satisfaction compared to 17 percent of men. progress report detailing key achievements and Working hours are correlated with satisfaction remaining challenges. Finally, after 16 months of in working conditions (although at a 90 percent working with factories, BW measures the factory confidence level—see Appendix A.2). Workers performance against a predefined set of differ- who work longer hours reported significantly entiation criteria, and those factories with very greater satisfaction with working conditions. This high performances are offered more advanced can be explained by the need for extra income services going forward. from overtime earnings. Here our data showed that women tend to work longer hours (56 as opposed to 54 hours per week) and earn slightly A Comparison of Men’s and more ($189 compared to $181 monthly). Women’s Feedback on Changes in Working Conditions Table 4.2: Satisfaction with Working Much remains to be done to better understand Conditions: 2015 Cambodia Apparel the impacts of Better Work programs on male Worker Survey, in percent and female workers. Synthesis compliance reports How satisfied are you are at the factory level and tell us little about the with work conditions different way men and women are impacted. in your factory? Female Male Alla Moreover, very little in the literature attempts to Very dissatisfied 1.10 4.46 1.77 understand how men and women may be affected differently by compliance rates. Robertson and Dissatisfied 5.96 12.50 7.26 Brown (unpublished) attempted to study these Neutral 27.59 25.00 27.08 impacts of compliance in Vietnam and found that Satisfied 55.85 49.11 54.51 differences in BW effects between men and women Very satisfied 9.49 8.93 9.38 are not statistically significant. However, there is stronger evidence about a positive relationship Source: Authors’ calculation from the 2015 Cambodia between compliance and overall life satisfaction Apparel Worker Survey. and several career conditions variables (especially a. Average across both female and male workers. 50 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Throughout the FGDs in Cambodia, Lesotho, “Our children should be better than us. They should and Vietnam, we did not find that men and women have a better future, and better jobs. They should experienced changes in compliance significantly work using their brains instead of their hands.” differently. In fact, most of the feedback garnered —28-year-old male worker, non-BW factory, from the male and female FGDs highlighted similar Vietnam themes. Thus, from the original data we collected and from the analysis carried out by Robertson Are There Differences in Worker and Brown, we find no evidence to suggest that the effects of changes in compliance affect men Satisfaction Based on the Level of and women differently. Better Work Involvement? A way to gauge overall satisfaction with As alluded to earlier, the 2015 Cambodia Apparel working conditions without directly asking this Worker Survey provided results to allow us to question was to ask whether workers would be discern between factories using assessment-only happy if their siblings or children undertook the services and those factories also receiving train- same job as them. We asked this question in FGDs ing and advisory services. The results suggest in Cambodia and Vietnam and again did not see that there is indeed a discernable difference a discernable difference between how men and concerning job satisfaction between workers women answered this question, although we did employed in factories with different levels of notice contrasting feedback. This is in line with the BFC involvement. Workers employed in factories literature, which finds that many women factory receiving assessment-only services are less satis- workers interviewed in locations as different as fied with their working condition (55 percent Central America and the Lao People’s Democratic reported satisfied or very satisfied) than workers Republic (Dominguez et al. 2010 and Record, in factories receiving additional services (about Kuttner, and Phouxay 2007) say they would not 66–67 percent are satisfied or very satisfied with wish to see their daughters or sisters working in their working conditions). Even after controlling export factories. They hoped their siblings could for characteristics such as age, marital status, and gain access to less-strenuous and better-paid jobs education as well as workers’ wealth, we find that than those offered by export-oriented manufac- this relationship holds (see Appendix A.2). Yet, turing (Fontana and Silberman 2013). Here are one must be cautious in drawing the conclusion two contrasting viewpoints reflecting reference that BFC advisory and training services directly periods, whether workers referred to a hypotheti- cause higher satisfaction. This relationship may cal situation now (siblings) or an aspiration for hold because high-performing factories that care the future (children): about working conditions may choose to sign “If I had siblings, I would encourage them to come up for more services from BFC in the first place. and work here because we work without being forced. When we get sick, we can request to leave early. They don’t force us to work, and we can work according to our ability.” —25-year-old female sewer, BFC factory, Cambodia Chapter 4: Improvements in Factory Working Conditions | 51 Pham’s story Age: 35 Years working in garment sector: 17 After graduating from high school, Pham worked in his hometown in the Nong Son Dis- trict of Quang Nam Province of Vietnam as a construction worker apprentice for three months, but it was not the career he wanted. His parents also urged him to learn a skill that could help him get a better job and Pham ended up taking the initiative to learn sewing from a local tailor. He then worked for that shop for three months before moving to Ho Chi Minh City (HCMC) to start working in a garment factory. His sister had moved to HCMC a year earlier and had warned Pham about the difficulties of the job and city life, yet Pham still chose to come because he did not see much of a future for himself back home, where he probably would have worked as a construction worker if he had not pursued a career in the garment industry. Since moving to HCMC, Pham has since worked in four different factories, and has been with his current factory for more than 10 years now. He is very happy at his current fac- tory, where he works as a technical worker and is a PICC member. Pham recalled his first day at work: My first impression on my first day of work was seeing the general director having lunch together with workers. I also saw the general director roll up his sleeves and help workers move/load/unload goods so I feel at home and have a strong attachment to my factory. The training that Pham received from Better Work (BW) in workplace communication also proved to be of value at home. Pham is now able to better communicate with his wife. While he would get upset in the past, he reported that now he calms down and speaks to her in a gentle tone to resolve any problems they may have. Pham also offered an interesting suggestion for a possible future area for training given that so many workers like him migrate from rural areas. He recommends that the factory provide practical programs for workers, such as life skills and knowledge/experience regarding city life so that workers can gain confidence and more quickly integrate into their new lives and contribute to their factories. Pham’s wife is also working in the garment industry. Together they have been able to save enough money to buy a house in HCMC. So he sees their future there, and despite the difficulties of life away from his parents, he reports that the schools in HCMC are better for his children. Pham’s dream is to continue working in the garment factory and earning money, which he plans to send to his parents, spend on his children’s education, and use to eventually open his own tailor shop in HCMC. 52 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector References Hall, John. 2000. “Human Rights and the Gar- ment Industry in Contemporary Cambodia.” Arthur, Anthony. 2006. Radical Innocent. New Stanford Journal of International Law 36 (1): York: Random House. 119–74. Berik, Günseli and Yana Van Der Meulen Rodg- Hall, John. 2010. “The ILO’s Better Factories ers. 2008. “Options for Enforcing Labour Cambodia Program: A Viable Blueprint for Standards: Lessons from Bangladesh and Cam- Promoting International Labor Rights?” Stan- bodia.” Journal of International Development ford Law & Policy Review 21: 427–60 22 (1): 56–85. Harrison, Ann E., and Jason Scorse. 2010. “Mul- Better Work. 2013. “Case Study: Better Work tinationals and Anti-Sweatshop Activism.” Vietnam Shows Path for Labour Law Reform.” American Economic Review 100.(1): 247–73. http://betterwork.org/vietnam/?p=2386. HRW (Human Rights Watch). 2015. “Work Faster Better Work Haiti. 2013. “Haiti Impact Brief.” or Get Out: Labor Rights Abuses in Cambo- http://betterwork.org/global/?p=7392. dia’s Garment Industry.” http://www.hrw.org/ Better Work Vietnam. 2013. “Vietnam Impact reports/2015/03/11/work-faster-or-get-out. Brief.” http://betterwork.org/vietnam/?p=2379. Kolben, Kevin. 2004. “Trade, Monitoring, and Better Work Vietnam. 2014. “Garment Industry the ILO: Working to Improve Conditions in 7th Compliance Synthesis Report.” June. Cambodia’s Garment Factories.” Yale Human Better Work. 2014. “Health and Safety in the Gar- Rights and Development Journal 7 (1): 79–107. ment Industry.” http://betterwork.org/global/ Labour Behind the Label and Community Legal wp-content/uploads/Infographic-HR.pdf. Education Center. 2013. “Shop ’til They Drop: Better Work. 2015. The Effectiveness of Better Fainting and Malnutrition in Garment Work- Work Training. Research Brief. May. http:// ers in Cambodia.” https://www.cleanclothes betterwork.org/global/?p=7415. .org/resources/national-cccs/shop-til-they-drop. Brown, Drusilla K.; Alan V. Deardorff; and Locke, Richard, Fei Qin, and Alberto Brause. 2007. Robert M. Stern. 2011. “Labor Standards and “Does Monitoring Improve Labor Standards? Human Rights: Implications for International Lessons from Nike. Industrial and Labor Rela- Trade and Investment.” IPC Working Paper tions Review 61 (1): 3–31. Series Number 119: Gerald R. Ford School of Locke, Richard M. 2013. The Promise and Limits Public Policy, University of Michigan. of Private Power: Promoting Labor Standards Brown, Drusilla, Rajeev Dehejia, and Raymond in a Global Economy (Cambridge Studies in Robertson. 2012. “Retrogression in Working Comparative Politics), Cambridge University Conditions: Evidence from Better Factories Press, New York, New York. Cambodia.” Better Work Discussion Paper Merk, Jeroen. 2012. “10 Years of the Better Series 6. Factories Cambodia Project: A Critical Evalu- Dominguez, Edme, Rosalba Icaza, Cirila Quintero, ation.” Community Legal Education Centre Silvia Lopez, and Asa Stenman. 2010. “Women and Clean Clothes Campaign. http://www Workers in the Maquiladoras and the Debate on .cleanclothes.org/resources/publications/ Global Labor Standards.” Feminist Economics ccc-clec-betterfactories-29-8.pdf. 16 (4): 185–209. Oka, Chikako. 2010b. “Channels of Buyer Influ- Fontana, Marzia, and Andrea Silberman. 2013. ence and Labor Standard Compliance: The Case “Analysing Better Work Data from a Gender of Cambodia’s Garment Sector.” Advances in Perspective: A Preliminary Exploration of Industrial and Labor Relations 17: 153–83. Worker Surveys with a Focus on Vietnam, O’Keeffe, Kate. 2013. “Cambodia Falls Short as ILO and IFC.” Better Work Discussion Paper Garment-Industry Model.” Wall Street Journal. Series: No. 13. International Labour Office, July 8. http://www.wsj.com/articles/SB100014 Geneva. 24127887324423904578521240151597504. Elliott, Kimberly Ann, and Richard B. Freeman. Pike, Kelly. Unpublished. “Better Work Lesotho 2003. Can Labor Standards Improve under Impact Assessment: A Comparative Study of Globalization? Washington, DC: Institute for Workers’ Feedback from 2011 and 2013.” International Economics. Chapter 4: Improvements in Factory Working Conditions | 53 Polaski, Sandra. 2004. “Cambodia Blazes a New Rossi, Arianna, and Raymond Robertson. 2011. Path to Economic Growth and Job Creation.” “Better Factories Cambodia: An Instrument for Carnegie Endowment for International Peace. Improving Industrial Relations in a Transna- Powell, Benjamin. 2014. “Meet the Old Sweat- tional Context.” Center for Global Development shops: Same as the New.” The Independent Working Paper 256. Review 19 (1): 109–122. Sibbel, Lejo, and Petra Bormann. 2007. “Link- Record, Richard, Stephanie Kuttner, and Kabma- ing Trade with Labor Rights: The ILO Better nivanh Phouxay. 2012. “Lao PDR: Labour Stan- Factories Cambodia Project.” Arizona Journal dards and Productivity in the Garments Export of International and Comparative Law 24 (1): Sector: A Survey of Managers and Workers.” 235–49. Report 70809-LA. World Bank. https://www Warren, Cael, and Raymond Robertson. 2011. .jobsknowledge.org/ExperiencesFromThe “Globalization, Wages, and Working Condi- Field/ProjectDocuments/World%20Bank%20 tions: A Case Study of Cambodian Garment %282012%29%20Lao%20PDR_Labour%20 Factories.” Center for Global Development standards%20No70809-LA.pdf. Working Paper 257. Robertson, Raymond, Drusilla Brown, Gaëlle Wetterberg, Ana. 2011. “Public-Private Partner- Pierre, and Maria Laura Sanchez-Puerta, eds. ship in Labor Standards Governance: Better 2009. Globalization, Wages, and the Quality Factories Cambodia.” Public Administration of Jobs: Five Country Studies. Washington, and Development 31: 64–73. DC: World Bank. WRC (Worker Rights Consortium). 2013. “Made Robertson, Raymond, Rajeev Dehejia, Drusilla in Vietnam: Labor Rights Violations in Viet- Brown, and Debra Ang. 2011. “Labour Law nam’s Export Manufacturing Sector,” May Compliance and Human Resource Management http://www.workersrights.org/linkeddocs/ Innovation: Better Factories Cambodia.” Better WRC_Vietnam_Briefing_Paper.pdf. Work Discussion Paper Series, No. 1. Robertson, Raymond. 2011. “Apparel Wages Before and After Better Factories Cambodia.” Better Work Discussion Paper Series, No. 3. Chapter 5: Improvements in Workers’ Lives Outside Factories Highlights The benefits of the Better Work (BW) program go beyond factory compliance and working L conditions. Workers also feel improvements in their lives at home and in their communities. Working in the garment industry is associated with a better quality of life for workers’ L families. In addition, field work in 2013 in Lesotho revealed that learning how to budget better was one of the most common improvements that workers talked about. Using 2011 data from Cambodia, we find that having a mother working in the apparel sector makes girls 6.5 percent more likely to attend school. Both quantitative results (in Cambodia) and qualitative findings (in Vietnam, Cambodia, L and Lesotho) confirm that women and men receive equal pay for equal work. The use of productivity targets and piece-rate remunerations also help explain the wage equality. Apparel jobs help women gain more equality in their families. Working in urban areas, in L the formal sector, and in fast-paced and demanding work in the garment industry could act as an agent of change in breaking old norms, like women bearing the burden of household chores. In addition, Cambodia data suggest a correlation between the length of exposure to the garment industry and the likelihood that households will switch to joint decision- making. The data also reveal that communication skills learned through BW has been key in changing parochial norms, as improved communication skills allows women to negotiate a new balance inside theirs home and society. 55 56 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Working in the garment industry impacts work- when dealing with male factory managers and ers’ lives beyond factory walls. Workers benefit employers may intensify. The fact that women from interventions of the Better Work program tend to be concentrated in lower-paying garment not only through improvements in their working jobs further challenges the notion that women conditions, but also from the knowledge they benefit greatly from employment in this sector. learn at the factory, which they bring home and One of the reasons for the scant literature on benefit their families (see Box 5.1). this subject is limited data availability. The Inter- The evidence presented in this section alludes national Labour Organization’s (ILO) 2012 report to benefits that Better Work programs can have Action-Oriented Research on Gender Equality beyond the factory floor. In particular, training and the Working and Living Conditions of Gar- conducted by Better Work related to communica- ment Factory Workers in Cambodia is a notable tion skills, first aid, budgeting, and other topics exception and offers interesting insights into how have impacts beyond the workplace. women and men experience the apparel sector In addition to considering the overall impacts differently. Yet, it only presents data from one beyond the factory, our research allows us to country. By contrast, in our study, we have the uncover a gender disaggregated picture. The lit- opportunity to employ the data we collected from erature assessing the status of women as a result the workers’ perspectives across four countries. of their employment in the garment industry finds Interesting findings emerge from these data. For that the impact is mixed. In a seminal article, Elson example, qualitative research in Lesotho found and Pearson (1981) highlight the contradictory areas that were particularly pertinent for the home ways in which factory work for global markets life of garment factory workers; many workers impacts women. While it opens up new avenues, spoke about improvements in health and safety it also creates new forms of gender subordination. at home, based on the skills and knowledge they For example, they note that although some women acquired through BW training. may gain greater autonomy from male members In this chapter, we will explore the impacts of of their household, female employee’s lack of voice garment sector jobs and BW program activities, Box 5.1: The Value of Communication Skills Training The results from the Lesotho survey suggest that benefits from communication skills training can often be substantial, so it is useful to consider that the value of Better Work (BW) training activities may not be fully captured by synthesis reports, which focus on compliance points. Here is an example: “I’ve learned more about communication [from Better Work]. If I have an issue with my husband, I should prepare myself to sit down and discuss in a calm manner and I should not shout at him. It is the same as at work because I always prepare myself. For example, I should know what I’m going to talk about, with whom I’m going to have the discussion, and that we’re going to discuss a certain issue and I’m prepared for it.” —Female quality control worker at BW factory; worked in the factory for six years, Lesotho Even if only anecdotal, the experience described above is encouraging. While our cod- ing of focus group discussions (FGDs) in Lesotho does allow for an analysis that goes beyond anecdotal findings, we still need to capture more systematically the impacts of programs such as Better Work beyond factory walls. Chapter 5: Improvements in Workers’ Lives Outside Factories | 57 especially training, on workers’ lives at home. are higher compared to those of other forms of As the Better Work program improves working waged employment accessible for women from conditions of women and men in the textile and low-income households. apparel sectors, direct impacts have been seen in We were able to explore the poverty profile of the form of improved employment and wages, and garment workers in Cambodia in detail based on indirect impacts have been realized in better com- the large number of garment and textile workers munication and women’s empowerment. Although captured in the 2012 national survey. Consider- discussed individually below, these improvements ing Cambodia as a whole, we find that poverty, are interrelated. For example, learning how to measured by consumption, of households with communicate better with family members leads garment workers is slightly lower than households to more productive financial planning as couples that are not associated with garment workers sit down together and discuss how to account for (poverty head count rate of 15.7 percent versus the their expenses. Additionally, decreased stress levels national poverty head count rate of 17.7 percent, at work mean workers are happier when they although the difference is not statistically signifi- come home and are better able to communicate cant). A further breakdown by region reveals an with their partners and children. interesting pattern. In urban areas (Phnom Penh The areas of impact on workers’ lives that and other provinces), the head count rate was will be analyzed in this chapter include impact actually higher among households with textile on their income, poverty reduction, and well- workers. This finding suggests that although being and impacts on their family lives, such as the textiles and apparel industry has been pro- communication within the family and decisions viding better opportunities than alternatives in about their children. In addition, this chapter will rural areas, garment workers (specifically their also explore improvement in gender equality and households) are still poorer when compared to household bargaining as well as greater impacts other urban dwellers. at large through changes in the law. Focusing on Phnom Penh reveals an even sharper contrast in the well-being of garment and textile workers. Households of garment workers in Well-Being and Poverty Reduction urban Phnom Penh are better off than the average garment household, with a poverty head count Country Level Findings rate of 8.3 percent, compared to the poverty head count rate of 15.7 percent of garment workers As explained earlier, expanding exports in the at the national level. However, their poverty rate garment industry can reduce poverty in certain is much higher than non-garment households in developing countries by expanding employment urban Phnom Penh (whose poverty rate is only opportunities for women from poorer households. 2.3 percent). This may be explained by the high Using Bangladesh and its export-oriented garment number of workers who send money back to industry as an example, Kabeer and Mahmud their rural hometowns. (2004) show that the export garment industry largely employs young unmarried women or Better Work Data Analysis married women without children. Women work- ing in Dhaka garment factories, especially those Better Work data from Vietnam also reveal a from poor rural populations, were able to earn similar pattern: enough to support themselves and at least one 70% of workers surveyed in Better Work Vietnam other adult member of the family and avoid fall- factories regularly or occasionally send money to ing below the poverty line. Despite long working family members. Nearly 60% of workers who remit hours at the garment factories, female workers still money annually send 4,000,000 Vietnamese Dong report that the job has improved their economic per year (USD 192), an amount that represents self-reliance and their ability to live on their approximately 15% of gross national income per own. Kabeer and Mahmud also find that labor capita in Vietnam. Furthermore, women workers standards in export-oriented garment factories remit 24% more than men. (Better Work 2013) 58 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Box 5.2: Poverty Measurement of Apparel Workers in Cambodia Usually, the poverty rate is measured at the household level since the standard poverty estimation method relies on comparing the level of household consumption with appro- priate poverty lines. Therefore, poverty rates shown in this report are actually the poverty level of the households that workers are living in at the moment. How can the poverty of workers from the 2015 workers survey be compared with the national poverty line? Generally, poverty analysis is carried out by using a national household survey with an extensive module on household consumption like the CSES. However, there is a consid- erable challenge in collecting direct income or consumption data upon which to assess poverty levels. Asking income or consumption questions in a household survey can be extremely time-consuming and vulnerable to error (due to dependency on recall, lengthy modules, etc.). This has been the main reason preventing researchers from studying pov- erty situations and well-being of a small and specific group of population like garment workers in factories in the Better Factories Cambodia (BFC) program. To overcome the challenge on data availability, this report employs the Survey of Well- being via Instant and Frequent Tracking (SWIFT) method, which entails collecting a hand- ful of strongly predictive poverty correlates, such as household size, ownership of assets or employment conditions, and then converts them to poverty statistics using rigorous estimation models. Collecting correlates is a far easier task and can be accomplished more quickly than collecting income or consumption data (World Bank, forthcoming). The projection model (see appendix F for estimation methodology and results) was combined with key data collected from the workers survey. Data collected from the workers survey include data about assets owned by each worker’s household, such as motorcycles, TVs, washing machines, etc., in addition to demographic data, such as the number of people in the household. Source: Yoshida, Nobuo; Munoz, Ricardo; Skinner, Alexander; Lee, Catherine Kyung-Eun; Brataj, Mario; Durbin, Spencer William; Sharma, D. 2015. SWIFT data collection guidelines: version two. Washington, D.C.: World Bank Group. Using data from the workers survey and the suggests that the 2015 Cambodia Apparel Work- SWIFT poverty projection model (Box 5.2), ers Survey is comparable to the apparel workers we find similar results to those found through interviewed by the national survey. studying the 2012 Cambodia Socio-Economic We find significant variation in poverty rates, Survey (CSES). The poverty head count rate for as depicted in Table 5.1, depending on the inten- apparel workers in our 2015 survey sample is sity of the intervention. The workers surveyed 4.8 percent. However, this poverty rate is not from category A factories (receiving assessment statistically different from the poverty head count only services) tend to be poorer than those in rate estimated from the CSES 2012 for garment category B (receiving assessment and training) workers’ households in urban Phnom Penh. This and C (receiving assessment, advisory services, Chapter 5: Improvements in Workers’ Lives Outside Factories | 59 Table 5.1: Poverty Head Count Ratios (%) across Better Factories Cambodia Box 5.3: Male-Female Wage Gap Workers after the End of the MFA     Male Female Total Savchenko and Lòpez-Acevedo (2012) Factory by A 7.00 5.99 6.07 studied the male-female wage gap in category of B 3.45 4.09 3.92 the garment industries of Cambodia services C 5.36 4.37 4.58 and Sri Lanka after the removal of the Multi-Fiber Arrangement (MFA) in 2005.   Total 4.88 4.78 4.80 They posit that as apparel prices declined Source: Authors’ calculation from poverty projection due to increased competition, apparel modeling. wage premiums would decline and the male-female wage gap would widen. In both countries, apparel prices first and training). The findings on difference in increased as they began exporting and poverty level across types of factories should be the wage gap decreased. When the read with caution. There could be endogeneity MFA ended in 2005, the reverse took in the wages across types of factories; factories place: apparel prices declined and the in category B and C may tend to hire workers wage gap widened. In Cambodia, the with higher qualifications, thus the workers may wage gap went up from 12 percent to tend to demand higher wages. A separate wage 13 percent (from 2004 to 2008). A regression (see appendix A.3) shows that work- similar yet more pronounced pattern ers in category B and C factories tend to receive is seen in Sri Lanka. In 2002 women higher earnings (controlling for hours worked, earned 40 percent less than men and and workers’ characteristics such as education the gap increased to 44 percent in and tenure). On the other hand, factories that 2008. Despite the widening wage gap, receive advisory services and training could have the authors found that the share of made changes in their human resource and factory females in apparel remained relatively management, which in turn boost productivity. stable in both countries following the Future studies could examine the differences in end of the MFA. technology used in different types of factories and how it can affect workers’ productivity and wages. Gender Wage Gap was no wage 1 discrimination based on sex. Although women make up the majority of garment They believed the reason was that they were factory workers, they are most often concentrated paid on a per-piece basis and the standard piece among the lowest skilled worker occupations rate applied to everyone working in a certain such as sewers. Their jobs explain why women occupation within their factory. The following garment workers may make less than their male is indicative of the common sentiment: counterparts (see Box 5.3). Thus, it is important “I observe there is no wage difference between to compare wages among workers with the same male and female workers for the same tasks. The jobs and attributes. difference exists due to work experience and posi- In our field research in Lesotho, most workers tion, not due to sex.” (about 92 percent) indicated their perception that men do not earn more than women. However, —30-year-old male worker, category A BFC factory, we did uncover a perception of unequal pay Cambodia among workers from factories not affiliated with BW. Similarly, in Cambodia and Vietnam 1  It should be noted that hourly wage is the subject of discussion in workers overwhelmingly reported that there this section, not earnings. 60 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector “We did not differentiate between men or women. than men (56 versus 54 hours per week). Yet Salary is paid based on their skills because it is a despite earning more money, female workers piece-based salary.” do not appear to own more assets. Only about —34-year-old female worker, BW factory, Vietnam 29 percent of women own motorcycles, com- pared to about 42 percent of men. One theory The qualitative findings from FGDs in Cam- is that female workers tend to save more and bodia are confirmed by wage regressions using send money to support their parents and younger the 2015 workers survey. Since hourly wage data family members. This is corroborated by FGDs could not be collected directly, the analysis uses as female participants often cited using extra monthly earnings of workers as the dependent money to support relatives or their children’s variable, but controls for the number of days education. The data from the 2015 Cambodia worked the previous week and number of hours workers survey also point to an area of concern worked per day. It also controls for the types of in terms of access to finance (for both female jobs that workers performed inside factories, as and male garment sector workers). The data well as demographic variables (age, education, show that only about 7 percent of the workers tenure, etc.). The coefficient for sex of workers is surveyed have bank accounts under their names. consistently insignificant, suggesting that there is Some participants in the FGDs mentioned their no gender wage gap (see Appendix A.3). dislike of using ATMs and their preference for receiving their salary in cash. This indicates Women Work and Earn More, that existing banking products are not suitable but Have Less for them. It is also an area that requires further Remarkably, the 2015 Cambodia Apparel Work- investigation and could be better linked with ers Survey results show that on average, women financial literacy trainings. earn more than men. Table 5.2 presents the breakdown of wages, hours worked and assets, Better Financial Budgeting by sex. The average monthly earning for female Data from Lesotho revealed that financial literacy workers in this survey is $189 per month, was one of the most common improvements compared to $181 per month for male work- highlighted by workers. In the baseline survey ers. This difference can be explained in part by in 2011, workers reported that there were ten- the fact that women tend to work longer hours sions in the household where it came to dealing with finances. Many workers mentioned that the Table 5.2: Work, Income, and Assets end of the month (payday) was a particularly Profile of Cambodian Garment Workers stressful time at home, despite the benefits of by Sex having money to buy groceries and clothes, and visit friends and family. Feedback collected in   Female Male the 2013 survey indicates that there have been Salary last month (USD) 189 181 considerable improvements in this area. Learning about budgeting was one of the most common Hours worked last week 56 54 improvements mentioned by workers. This is an Days worked last month 23 22 important skill in particular given the low salaries Personally own a washing that factory workers earn. Some workers said that machine 1% 1% this helped them on an individual level. A factory Personally own a motorcycle 29% 42% worker in Lesotho commented Personally own a TV 41% 45% “I’ve learned to draw up a budget for my family. I should have a list of all the things that I need and, Personally own a cellphone 92% 93% when I get to the shop, I should not buy anything Has bank account 6% 8% that is not on the list.” Source: Authors’ calculation from 2015 Cambodia Apparel —Male worker (cutting) at a BW factory; working Worker Survey. at the factory for 8 years with BW, Lesotho Chapter 5: Improvements in Workers’ Lives Outside Factories | 61 “BW has helped me in drawing up my budget and a significant shift in how couples communicated. also has helped me to save some money. The change A male FGD participant commented: I get after my groceries, then I can put them in a “In my family I go by the rules of BW. For instance, can, then take it to the bank, then I’ll do something if my wife has done something wrong, I’m able important with that.” to sit down with her and tell her that, look, you —Female sewer at a BW factory; working at the did this and I’m not happy about it. How can we factory for 11 years, Lesotho resolve it?” Others commented on how they are better —Male working in cutting department at a BW able to budget with their partners, again tying factory; working at factory for 6 years, Lesotho into improved communication: Beyond improved communication between hus- “BW has taught us to be open with each other, man bands and wives, workers reported that there is and wife. Now, we are able to put down our salary also improved communication between other and discuss a way forward to build their family. friends and family members such as parents and Whereas in the olden days, a man would just give children, or between siblings. his wife R50 and the wife would not even care to Many workers said that they are now less ask where the rest of the money was.” stressed than they were before BW, either because —Female sewer at a BW factory; working at the their employers are not shouting at them or they factory for 1 year, 7 months, Lesotho are being given notice about overtime. These changes made them feel better about going to It was clear from workers’ feedback that learn- work and also put them in a better frame of mind ing to budget not only helped their finances but when they returned home. They were less stressed also helped improve their relationships. Unlike the and therefore more likely to be kinder and more feedback in the 2011 worker survey in Lesotho communicative with their family members. A male where workers reported tensions at home related factory worker in Lesotho commented: to family finances, in 2013 many of them referred to the training they had received on how to budget “Before BW I used to stress about the mistakes and spoke about how they were applying those that I might make at work because there was no skills at home. Consequently, because they are good communication between me and my employer. communicating more about the money they make Since BW, when I’m at home, I don’t think about and how to budget it, there is more transparency work at all because I’m not worried about making and hence less distrust about where that money is mistakes because I know that when I’m called in being spent. That is not to say that the problem the office they will also call in a witness so that has been eliminated, but workers report that it we can sit down and discuss the mistake I made.” is one of the more significant improvements at —Male sewer at BW factory; working at factory home since their factory joined the Better Work for 1 year, 8 months, Lesotho program. During the focus group discussions in Lesotho, there was also a great deal of positive feedback Communication Skills regarding improved communication between and Family Lives couples. Workers reported using what they learned from BW trainings on conflict resolution in their The surveys from Cambodia, Vietnam, and Leso- personal lives. tho, revealed positive impacts of BW involvement on workers’ family lives. Specifically, the data suggest that improved communication at home Decisions about Children’s and decreased stress levels have contributed to their higher level of satisfaction in family lives. Education Better communication in households also enables The pronounced effect of a mother’s working families to make better decisions. The 2013 status on girls’ education has been documented focus group discussions from Lesotho signaled by Duflo (2012) and World Bank (2011), which 62 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector describe numerous cases in which expanding The descriptive statistics from the 2011 CSES female’s work opportunities benefits girls and show that 73.4 percent of children whose mothers reduces gender inequality. Moreover, Klasen are employed in the textile and apparel indus- (2002) shows that inequality in education by try pursue education without simultaneously gender has a negative effect on long-term economic working. By way of comparison, less than half growth affected by two channels—a direct chan- (47.7 percent) of children whose mothers work nel through lower average human capital and an in the agricultural sector focus solely on study- indirect one through higher population growth ing. Moreover, 9.3 percent of children of textile due to higher fertility rates in countries where workers do not pursue education compared to women have lower rates of education. 25.2 percent of children of agricultural workers. Jobs in garment factories are shown to have Table 5.3 summarizes these data points. positive effects on the educational attainment of To capture the effect of the mother working in girls. In Bangladesh, girls are more likely to stay textile and apparel sectors on children’s school in schools at a younger age (5 to 9) due to jobs attendance, specifically girls, we include interactive in garment factories, but the effect magnitude variables capturing the impact of having a mother decreases after they are over 11 years old. Over- working in the textile and apparel sectors on girls’ all, women’s earned income can improve female school attendance probability. We compare these bargaining power within households (Das 2008), results with the effect of having a mother that which is also beneficial for girls’ education (Heath works in similar sectors. We then construct two and Mobarak 2014). coefficients that we estimate for every year and This section will provide additional evidence report in Table 5.4. The first coefficient (girl’s from Cambodia on the relationship between mother works in the textile and apparel sector) is women’s work and the education of their children. constructed as the sum of the marginal effects of It will also attempt to attribute the impacts from three variables: if the child is female, if the child’s the BFC program. By increasing expected future mother works in textile and apparel sectors, and income at the cost of foregone earnings while the interaction between these two variables. The young and by deterring children from working, second coefficient (girl’s mother works in tex- improved education has long-run positive effects tile and apparel versus working in comparison on the economy in the aggregate. Using data from sectors) is constructed by subtracting from the the Cambodia Socio-Economic Surveys (CSES) first coefficient the marginal effects of having a for years 2004 and 2009–11 allows us to study mother who works in a comparison sector and women’s working status in several economic the marginal effect of being a girl whose mother sectors, to control for a series of observable char- works in the comparison sector. The full model acteristics, and to make a link between parents’ can be found in Appendix A.4. employment and children’s education decisions. Table 5.3: Children’s Activities by Economic Sectors of Mothers (%) Study No study Economic sector Study only and work Work only no work Total Agriculture 47.7 27.1 13.4 11.8 100 Textile and apparel 73.4 17.3 5.5 3.8 100 Construction 57.5 23.6 8.3 10.5 100 Public administration 85.8 14.2 0.0 0.0 100 Social services 93.2 0.0 0.0 6.8 100 Other 69.8 18.7 2.9 8.5 100 Source: Cambodia Socio-Economic Survey 2011. Chapter 5: Improvements in Workers’ Lives Outside Factories | 63 Table 5.4: Impact of Having a Mother Who Works This is highly significant given that in the Textile Sector on a Girl’s School Attendance even though child marriage has Probability been illegal in Bangladesh since the 1920s, three-quarters of girls 2004 2009 2010 2011 are married by their 18th birth- Girl’s mother works in textile day (Klugman et al. 2014). Corre- and apparel –0.001 0.010 0.055 0.065* spondingly, females between 10 and 23 years old who have access to Girl’s mother works in textile and apparel versus working factory jobs are 13 percent more in comparison sectors 0.034 0.018 0.088* 0.141*** likely to work outside the home. In addition, girls who live in vil- Source: CSES, various years. lages near these factories are Note: *** p<0.01, *p<0.10. Comparison sectors include manufacturing, wood, 29 percent less likely to give birth and forestry. in any given year, but the industry has no effect on the corresponding The coefficients are statistically significant for marriage and childbirth timing for males. In addi- 2010 and 2011. In 2011 having a mother work- tion, Khosla (2009) finds that the women have ing in the textile and apparel sectors makes girls greater economic independence, respect, social 6.5 percent more likely to attend school. Com- standing, and “voice” than before, even though pared to other similar sectors, this probability is harassment and exploitation persists (Fontana 14.1 percent higher. and Silberman 2013). Clearly, more analysis is needed to better Female garment workers are not a monolithic understand why this may be the case. Addition- group and their experiences within the garment ally, further investigation can explore whether industry may substantially differ. Fontana and women’s employment in the textile industry has Silberman (2013) identify such differences in additional positive effects for daughters, perhaps Vietnam. They find that although men are more in terms of nutrition or future job opportunities. comfortable in expressing their concerns to man- agement than women, looking within the female Gender Equality and Women’s subset, better-educated women are substantially more likely to exercise their right to voice com- Agency plaints. They also find that married women with Evidence from Bangladesh has shown that the infants seem to have similar opportunities to garment industry has contributed to advancing other women, except that they have less leisure gender equality. The garment sector in Bangla- time and are more likely to have health problems. desh has grown 17 percent annually on average Qualitative data from fieldwork offer addi- since its start and accounts for more than three- tional insight into how employment in the gar- quarters of Bangladesh’s export income. It was ment sector, together with the implementation the first sector to employ women on a large scale of the Better Work program, actually contributes in the traditionally male-employment–dominated to improving gender dynamics and household country. Not only does the garment industry bargaining within a worker’s family. In this bring economic growth to Bangladesh, but also regard, working in urban areas, in the formal it explains the decreased hazards of early mar- sector, and in fast-paced and demanding work riage and early childbirth for Bangladeshi women in the garment industry could act as an agent of (Heath and Mobarak 2014). Heath and Mobarak change in changing old norms, such as women document 1,395 households in 60 Bangladeshi having to bear the burden of household chores. villages that have employment access to garment The data also reveal that communication skills factories and find that delays in marriages and learned through BW training is key in changing childbirth for women between the ages of 17 to parochial norms as it equips women with the 23 who live in villages near garment factories as skills and knowledge to negotiate a new balance they choose to be employed in garment factories. inside their home and in society. 64 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Bargaining Power at Home: Increase For example, as we both are working, if I arrive in Shared Responsibility home early, I cook, I clean the house. She finds everything in a good space. I do laundry also. We Even though the workers in Vietnam did not help each other. [Before BW] I seldom did it. Now explicitly attribute the change in responsibility I do it often.” in household chores to BW, the majority of them acknowledge that the equal arrangement they are —Male worker in cutting department at BW factory; now experiencing is different from their parents’ worked in factory for 10 years, Lesotho generation. While many women interpreted the On the other end of the spectrum, long working change in terms of a more equal status of women hours negatively affects the lives of female apparel and men, some men attribute the change to the workers in Kenya, a country without a BW pro- demands of urban life. As one focus group discus- gram. In the FGDs held in Kenya, the majority sion participant suggested: of female workers said that their husbands were “It is different because of the characteristics of the frustrated with them for coming home late and work. My mom is a housewife and my father was not fully performing their household duties. At the one worked, so it was natural that my mom the same time, the male workers from Kenya takes care of the house. For us, both my wife and reported that they were not willing to contribute I work, coming home late so if we don’t prepare to household chores. They reasoned that “it is a dinner together for example, what time can we woman’s job” and that “if he helps one day, she have dinner?” will expect it every day.” —40-year-old male supervisor, non-BW factory, Vietnam Women’s Agency in Household Decision-Making FGD participants in Vietnam and Cambodia— men and women alike— mentioned that the divi- Another measure of gender equality is women’s sion of labor at home was equal. The following agency in household decision-making. In many quotes reflect the general sentiment: instances, it is measured by the extent to which women take part in household decision-making “When I get home and see my wife doing something, or whether major decisions in households are I immediately roll up my sleeves and help her.” made jointly. Sikdar, Sarkar, and Sadeka (2014) —38-year-old male technician, non-BW factory, present survey data from Bangladesh showing Vietnam that 35 percent of female garment workers have full control over the spending of their earnings. “There is no division. I would even say that my A slightly higher number of women (37 percent) husband does more housework than me as he report participating in joint decision-making with understands that I am busy.” their husbands. Only 5 percent of women workers —34-year-old female supervisor, BFC factory, report having to hand over all their income to Cambodia their husbands. The rest of workers, 21 percent, jointly make spending decisions with family Our Lesotho qualitative survey did not find members like parents or elder brothers. a widespread pattern about men helping with According to our survey of garment factory chores at home, although we did find some evi- workers in Cambodia, the vast majority of mar- dence to suggest that trainings were having an ried workers reported that they make major impact in terms of better distributing the burden decisions jointly with their husbands or wives. of domestic work between men and women. As About 95 percent of respondents reported that one man commented: they make joint decisions about family, such as “Even at home, I think Better Work has really about children’s schooling, and finances, such as improved our lives. We now share responsibili- whether to buy a new TV. ties. Even our community is cleaner because we Working in the garment sector helps break apply whatever we learn from the BW trainings. down gender barriers and can make household Chapter 5: Improvements in Workers’ Lives Outside Factories | 65 Figure 5.1: Percentage of Households Switching to Joint Household Decision-Making, by Years Worked in Garment Sector 40 35 30 25 Percent 20 15 10 5 0 0 to 2 2 to 4 4 to 6 6 to 8 8 or more years Years working in garment sector Female Male Source: Authors’ calculation from 2015 Cambodia Apparel Worker Survey. decision-making more equal. While most workers presented are about financial decisions, but the said that they had joint decision power in house- results are similar for family decisions. hold decisions and that this had been the case even before they started working at the factory, about Empowerment through Knowledge 25 percent of workers in Cambodia reported In Lesotho, when asked whether Better Work that the mode of household decision-making was had led to any improvements at home, many different in the past and they changed to joint workers mentioned the first aid skills they had decision-making after working in the factory. acquired in BW training sessions on health and Both male and female workers provided answers safety. Some of the skills they alluded to were how in the same direction, but more female workers to help someone who is bleeding, how to put out reported that the decision-making changed from fires, how to keep their homes well ventilated, decisions made solely by their husbands to deci- proper nutrition, and teaching their children sions made jointly. about better hygiene. A female factory worker Figure 5.1 suggests that there may be a correla- in Lesotho remarked: tion between the length of exposure to the garment “I was trained in first aid, so when I’m at home I industry and the likelihood that households will am able to apply that. Even when I meet people adopt joint decision-making. For female workers, on the street who have problems, I’m able to apply the chart below shows a clear relationship between the skill.” the length of tenure in the garment industry and —Female sewer at BW factory; worked in factory the likelihood that their family will switch to for 20 years, Lesotho joint decision-making, from 15 percent during the first two years to more than 30 percent after Knowledge has also led to empowerment, six years in the garment industry. The numbers particularly for women. Many now feel that 66 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector they are empowered to carry out tasks that have lower education and a negligible share of women traditionally been exclusively undertaken by men. with higher education use factory-provided A female factory worker in Lesotho commented: childcare facilities. The most likely reason is that “Yes, I taught my husband [about how to put out these services are either considered to be of poor fire]. . . . Because we are poor, we don’t have a fire quality or are not available at all. The finding that extinguisher at home. If there are things on fire like a considerable share of the female workforce has when we are cooking with oil, don’t take some water young children also suggests that one priority and pour in the pot. Just take something, and put it area for BW program activities in Vietnam might [to cover the pot]. Oxygen is the enemy. Don’t give be improved provision of childcare and health it a chance to enter the house. Don’t open the door. facilities that support women workers in their Don’t open the windows. Because if you open the role as primary care providers. door, oxygen comes inside, then fire can be bigger A promising legal change was also made in than when you think. . . . Things like this. I told Lesotho recently, whereby garment workers him. . . . Really he can appreciate. This woman are now entitled to six weeks of paid maternity understands many things that I didn’t realize.” leave (Better Work 2015). This may still not be adequate, but it represents a dramatic increase —37-year-old female, BW factory, Lesotho inter- from the two weeks of paid leave that women view, Maseru were afforded in 2013. Positive Legal Changes Remaining Challenges: Physical Safety and Societal Norms Robertson and Brown (unpublished) reference several positive changes in Vietnamese labor law Clearly, programs such as Better Work represent since the introduction of the Better Work program, just one initiative that plays a part in the broader although they do not draw a direct connection social and cultural context that apparel workers between the changes and BW. They write: find themselves in. The BW program has largely been focused on ensuring that all workers, men In 2012 the National Assembly approved the Labor and women alike, are able to operate in better Code amendment to allow women 6 months of conditions and with better pay. In this regard, maternity leave instead of 4 months as before. In the program has been largely successful. Both addition, there are several provisions in the law male and female apparel workers have recounted that prohibit employers for discharging a female stories of how BW training has impacted life employee who: (1) has a child under one year of beyond the factory. However, there are areas age; (2) is on maternity leave; (3) is pregnant; or where analysis and field work data for this report (4) is getting married. Also, a female employee have not covered, such as the risk of gender-based may unilaterally terminate the contract without violence and social norms about working women. having to pay compensation if she has a doctor’s Better Work itself has undertaken substantial certificate confirming that continued employment research on sexual harassment in the workplace would adversely affect the well-being of her fetus. (see discussion papers no. 14 and no. 16 on the A female employee may also return to work before BW website). the end of her maternity leave if she has had at least “Another issue that this report has not covered, 2 months of rest after birth and a doctor’s certifi- but is worth mentioning in the context of this cate stating that she is healthy enough to work. In discussion, has to do with the risks women face this case, the female employee is entitled to both outside the factories in which they work. Not the maternity leave allowance and her common only do they face risks inside factories due to day-to-day salary. poor working conditions, but they also face the We already know that translating law into risk of physical harm on their way to and from practice can be difficult, but it is still notable that work. Sikdar, Sarkar, and Sadeka (2014) found such legal changes were introduced in a Better that almost 78 percent of female apparel workers Work country. In fact, Fontana and Silberman in Bangladesh commute to their workplace solely (2013) find that only 3 percent of women with on foot. This puts them at great risk, especially Chapter 5: Improvements in Workers’ Lives Outside Factories | 67 Pinda’s story Age: 37 Years working in garment sector: 12 Coming from Koro, a rural town in Lesotho, Pinda dropped out of school to work as a babysitter to help support her family. After her mother disappeared when Pinda was only 8, she went to live with her grandmother and her sisters. After some time, Pinda realized that her income was not enough to sustain their livelihood and thus made the move to work in a garment factory when she was 25 years old. Even today Pinda still has to support a large family including two of her sisters, her children, and her husband (who works but in the agricultural sector). Pinda vividly remembers that Better Work first started operating in their factory in 2012. During her interview with us, she described three of the benefits of the Better Work program in detail. OSH training benefit: greater safety and preparedness “After Better Work came to my factory, things really changed. Because I didn’t understand how firefighters, health and safety, and smoking houses work. We now have things like this. Exit line. Evacuation plan. First aid kits. Things have changed.” Benefit of being a PICC member: confidence “Since Better Work came to my factory, I have been one of the members of PICC [per- formance improvement consultative committees] in my factory. I feel comfortable and confident because the one thing I can feel, the one is important is that we have a meeting with the factory manager, with the management and discuss some problems. And we can see what we achieve.” “After becoming a PICC member, really they can see they come to me and ask me many questions and I can tell me. And I teach them some many things. Really I feel so confi- dent. Really.” Budget training benefits: better budgeting “I appreciate Better Work because I didn’t understand how to manage my salary. I was the one who attend the workshop with Better Work. They gave us some training about budgeting and really I realize how to manage my salary. Even if it is small, I have to man- age it. I have to sit down and see how things are going.” 68 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector when returning from work at late hours. Pike Cambodia Socio-Economic Survey. Various years. (unpublished) in her analysis of Lesotho, reports Phnom Penh: National Institute of Statistics- a similar finding. She explains that although some Ministry of Planning. workers cannot afford to take buses to work, those CCC (Clean Clothes Campaign). 2005. “Made by who do take buses are also at risk because the bus Women: Gender, the Global Garment Indus- stop may be a good distance from their homes. try and the Movement for Women Workers’ Pike reports that fears for safety are especially Rights.” Clean Clothes Campaign. http://www acute in winter, when the days are short and it .cleanclothes.org/resources/publications/ is dark during the commute to and from work. made-by-women.pdf/view. In this regard, new initiatives are starting in a Das, Maitreyi Bordia. 2008. “Whispers to Voices: number of developing countries to combat sexual Gender and Social Transformation in Ban- harassment against women. In Mexico City, the gladesh.” Bangladesh Development Series urban public transport system is piloting a new Paper 22. Washington, DC: World Bank. project promoting the involvement of bus drivers http://documents.worldbank.org/curated/ and bystanders to interrupt sexual harassment en/2008/03/9163686/whispers-voices-gender- (Domínguez, Arango, and McCleary-Sills 2015). social-transformation-bangladesh. However, more efforts can be done to tailor actions Domínguez González, Karla; Arango, Diana J.; to the need to factory workers. McCleary-Sills, Jennifer Diane. 2015. Violence Norms about women’s participation in the Against Women and Girls: Transport Brief. labor force and contributions to the economy World Bank, Washington, DC. can change and have changed in many parts of Duflo, Esther. 2012. “Women Empowerment and the world. Unfortunately, in many societies across Economic Development.” Journal of Economic the world, there are still negative attitudes about Literature 50 (4): 1051–79. women working outside their homes, contributing Elson, Diane, and Ruth Pearson. 1981. “‘Nimble to the economy, and providing for their families. Fingers Make Cheap Workers’: An Analysis Lynch (2007) documents negative connotations of Women’s Employment in Third World associated with apparel workers by society in Sri Export Manufacturing.” Feminist Review 81 Lanka, which include name-calling to suggest that (7): 87–107. women garment workers are sexually promiscu- Fontana, Marzia, and Andrea Silberman. 2013. ous. This reminds us that although programs “Analysing Better Work Data from a Gender such as Better Work may help to enforce codes Perspective: A Preliminary Exploration of of conduct, more needs to be done in addressing Worker Surveys with a Focus on Vietnam, ILO “nonemployment” issues faced by women workers and IFC. Better Work Discussion Paper Series: in the apparel sector. A Clean Clothes Campaign No. 13. International Labour Office, Geneva. (2005) report stresses that despite the gains that Heath, Rachel, and Ahmed M. Mobarak. 2014. have been made, there is an ongoing challenge to “Manufacturing Growth and the Lives of communicate the importance of gender in shaping Bangladeshi Women.” NBER (National Bureau conditions in the global garment industry. of Economic Research) Working Paper Series w20383. Kabeer, Naila, and Simeen Mahmud. 2004. “Glo- References balization, Gender and Poverty: Bangladeshi Better Work. 2013. “Impact Brief: Better Work Viet- Women Workers in Export and Local Markets.” nam.” http://betterwork.org/global/wp-content/ Journal of International Development 16 (1): uploads/Vietnam-Impact-Brief-Rnd5_LR.pdf. 93–109. Better Work. 2015. “Women in the Garment Khosla, Nidhi. 2009. “The Ready-Made Garments Industry 2015.” http://betterwork.org/ Industry in Bangladesh: A Means to Reducing global/?p=7169. Gender-Based Social Exclusion of Women?” Chapter 5: Improvements in Workers’ Lives Outside Factories | 69 Journal of International Women’s Studies 11 Savchenko, Yevgeniya, and Gladys Lòpez- (1): 289–303. Acevedo. 2012. “Female Wages in the Apparel Klasen, Stephan. 2002. “Low Schooling for Girls, Industry Post-MFA: The Cases of Cambodia Slower Growth for All?” World Bank Economic and Sri Lanka.” Policy Research Working Review 16: 345–373. Paper 6061. Washington, DC: World Bank. Klugman, Jeni, Lucia Hanmer, Sarah Twigg, http://documents.worldbank.org/curated/ Tazeen Hasan, Jennifer McCleary-Sills, and en/2012/05/16258530/female-wages-apparel- Julieth Santamaria. 2014. Voice and Agency: industry-post-mfa-cases-cambodia-sri-lanka. Empowering Women and Girls for Shared Sikdar, Mehedi Hasan, Md., Sujahangir Kabir Prosperity. Washington, DC: World Bank Sarkar, and Sumaiya Sadeka. 2014. “Socio- Group. https://openknowledge.worldbank.org/ Economic Conditions of the Female Garment handle/10986/19036 License: CC BY 3.0 IGO. Workers in the Capital City of Bangladesh.” Lynch, Caitrin. 2007. Juki Girls, Good Girls: International Journal of Humanities and Social Gender and Cultural Politics in Sri Lanka’s Science 4 (3): 173–79. Global Garment Industry. ILR Press at Oxford World Bank. 2011. 2012 World Development University Press. Report on Gender Equality and Development. Pike, Kelly. Unpublished. “Better Work Lesotho World Bank, Washington, DC. Impact Assessment: A Comparative Study of Yoshida, Nobuo; Munoz, Ricardo; Skinner, Workers’ Feedback from 2011 and 2013.” Alexander; Lee, Catherine Kyung-Eun; Brataj, Robertson, Raymond and Brown, Drusilla. Mario; Durbin, Spencer William; Sharma, D. Unpublished. “Gender Differences in Factory 2015. SWIFT data collection guidelines: version Compliance Effects: Evidence from Vietnam.” two. Washington, D.C.: World Bank Group. Chapter 6: Improvements in Working Conditions and Firm and Industry Performance Highlights Profits, productivity, and survival are all positively associated with improvements in working L conditions. Policies to improve working conditions have been proven to boost profitability through reducing staff turnover and absenteeism. Research from Vietnam shows that Better Work factories may be performing better than L their counterparts. Wages in Better Work factories are higher than comparable factories not participating in the Better Work program. Profits, however, are comparable between the two groups, which suggests that Better Work factories are able to support higher wages without adversely affecting their profits. At the country level, being in the Better Work program is associated with significant increases L in apparel exports both to the world generally and to the United States in particular. This relationship holds true after controlling for relevant factors that may affect apparel trade. One of the most significant debates surrounding pay, teamwork, communications, and training working conditions is whether improving them increase productivity, profits, and product at the factory level can improve factory perfor- quality (Bandiera, Barankay, and Rasul 2007; mance. Improving human resource manage- Hamilton, Nickerson, and Owan 2003; Ichnio- ment through, for example, performance-based wski, Shaw, and Prennushi 1997; Sheehan 2013; 71 72 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Box 6.1: A Race to the Top: Greater Productivity and Improved Worker Welfare Asuyama et al. (2013) delve deeper into the post-MFA (Multi-Fibre Arrangement) period, studying changes in performance of Cambodia garment firms between 2002/03 and 2008/09. They cite improved average total-factor productivity (TFP) as a key reason for how the Cambodian garment industry managed to increase its production and profits in the face of increased competition. They then ask if this was achieved by sacrificing the welfare of workers, especially low-skilled workers. The answer is emphatically no. In fact, they identify an improvement in workers’ welfare, including a rise in the relative wages of the lower-skilled workers. “These industrial dynamics differ considerably from those indicated by the ‘race to the bottom’ argument as applied to labor-intensive industrializa- tion in low-income countries.” Beresford (2009) similarly finds no evidence of a decline in labor standards as competition increased post-MFA. Sources: Asuyama et al. 2013; Beresford 2009 Asuyama et al. 2013) demonstrate that firm-level of combined savings from reduced absenteeism productivity rose in Cambodia while working and staff turnover (IFC 2013). conditions also improved (Box 6.1). Better Work One of the most common questions concern- (2014) reports that across all BW countries, ing this literature is If improving HRM policies factories where workers are happier with health can improve factory performance, why haven’t and hygiene issues and feel comfortable raising factories already adopted such strategies? This concerns make more than 7 percent more profits. question is especially salient among economists If worker turnover could be reduced through who commonly assume that factories (like most improving conditions, then the reduction in economic agents) act with perfect information. turnover could represent significant savings for Recent evidence, however, suggests that the perfect the factory. Nalt Enterprise, a Vietnamese Better information assumption might not hold. Pike and Work participating supplier, estimates that it Godfrey (2012) and Domat et al. (2013) show takes up to three months for a new textile worker that managers inaccurately perceive worker’s to reach full productivity. Translated into savings value of improved working conditions. In a highly from reduced training costs and maintaining influential article, Bloom et al. (2013) show that full productivity, a 10 percent reduction in staff recommendations from outside consultants to turnover would save the factory 8.5 percent of firm management about how to improve quality total annual wage cost (IFC 2013). control, inventory management, information- Relatively straightforward policies aimed at sharing, and incentives increased productivity improving working conditions have been proven and profits in large Indian textile firms. to boost profitability through reducing staff These examples suggest that there is a potential turnover and absenteeism. For example, at Nalt role for outside engagement in improving working Enterprise, a Vietnamese Better Work participat- conditions. Other reasons for outside engagement ing firm, staff turnover fell by one third after the include negative external effects generated by poor company established a kindergarten for workers’ working conditions in noncompliant factories on children. In Bangladesh, a program that delivered national reputation (Basu, Chau, and Grote 2006), health services to female workers in apparel ineffective monitoring of working conditions by factories demonstrated a $3 to $1 return on international buyers engaged in reputation risk investment over an 18-month period, as a result mitigation (Polaski 2006, 2009), and inefficient Chapter 6: Improvements in Working Conditions and Firm and Industry Performance | 73 labor management technology that arises due more capable factory managers tend to generate to costly experimentation in human resource better factory outcomes and improve working management innovation (Fung, O’Rourke, and conditions. The lack of data about the capability Sabel 2001 and Domat et al. 2013). of factory managers is the main reason that they could not establish causality. Regardless of whether a common third factor Working Conditions and Firm (manager ability) is a factor, the interesting aspect Performance of this result is that it seems to suggest that improv- Profits, productivity, and survival are all posi- ing working conditions is a good decision. In other tively associated with improvements in working words, because highly capable managers are more conditions. Several papers have taken various likely, by definition, to make good decisions and approaches to try to identify the relationship tend to improve working conditions, then it may between firm performance and working condi- be unlikely that improving working conditions tions. Brown, Dehejia, and Robertson (2011), for is the kind of decision that might hurt the firm. example, consider the relationship between firm It is possible that improvements in working survival and improvements in working conditions. conditions require higher performance. If improve- Using a panel data set from the Better Factories ments in working conditions are expensive, then Cambodia (BFC) program, they find no evidence only firms that are ex ante profitable would be that improvements in working conditions are able to improve conditions. But if improving con- associated with a higher probability of closure. ditions is a voluntary move, and improvements On the contrary, they find evidence that improving have adverse effects, it is unlikely that managers working conditions is associated with increased would choose to improve them. chances of survival. Asuyama, Fukunishi, and Robertson (2015) Human Resource Management build on the analysis of productivity in Cambodia by Asuyama et al. (2013). This analysis docu- Policies and Firm Performance ments rising productivity in Cambodia’s apparel In the growing field of personnel economics, a large factories at the same time improvements are seen and growing literature uses empirical analysis to in working conditions. They do not, however, estimate the relationship between improvements have specific factory-level measures of working in working conditions and firm performance. The conditions. Asuyama et al. (2015) bridge this terminology used in this literature defines work- gap by combining firm-specific working condi- ing conditions as human resource management tions measures with productivity measures. The (HRM) policies. Human resource management results, while still preliminary, suggest that there policies consist of a wide range of issues, includ- is a positive relationship between productivity ing remuneration (not only levels, but frequency, and working conditions. accuracy, contracts, and so on), ambient conditions Using data from Vietnam, Brown et al. (2015) (e.g., temperature, water quality, and air quality), conduct a similar study but are able to calculate relationships with unions, including freedom of factory-level profits. Their results are very similar association and collective bargaining (FACB), and to Asuyama et al. (2015) in the sense that they other policies. Factory managers work with human find no evidence that improvements in working resource directors to develop and enforce these conditions are associated with falling profits. policies. When HRM policies are designed to elicit In fact, they conclude that there is a positive specific responses from workers, such as increas- relationship between improvements in working ing effort in a particular task or reducing turnover conditions, labor productivity, and factory profits. specifically, these polices might be called strategic Although these studies all have similar find- human resource management (SHRM) policies. ings, they suffer from the same weakness: none is Both kinds of policies appear in the literature. able to definitively show that improving working As with all policies, managers weigh the costs conditions per se leads to improved factory per- and benefits of different policy options when formance. In this regard, it is also possible that shaping HRM policies. The costs are often clear 74 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Figure 6.1: Human Resource Management Policies and Labor Standards National and Human international resource labor management standards policies and certain. For example, adding an air condi- to the 1960s. McGregor (1960) points out that tioner has a clear and certain cost. In principle, firms may choose to view workers as either costs the benefits are conceptually clear. Improvements to be minimized or as talent that improves with in working conditions can improve productivity investment. Subsequent studies engage in a lively if workers respond by working harder. Improved debate over whether HRM or SHRM policies pay may elicit additional effort or may be neces- improve firm performance generally or promote sary to get workers to accept dangerous tasks. specific worker responses such as loyalty or effort. Improvements may also reduce worker turnover, One of the key ideas in this literature is that which means lower costs to the firms in terms workers care more about some job characteristics of both separation costs and hiring costs. These than others. For example, in some settings, work- benefits, however, are often difficult to quantify ers might be willing to accept less pay in exchange and are often uncertain. for more flexibility with working hours. Improving HRM policies partially overlap with national job characteristics that workers care about can and international labor standards (Figure 6.1). motivate workers to improve the quality of their Few studies formally compare the overlap between work (Hackman and Oldham 1976). Because these two areas. Many of the HRM policies cov- jobs have many different characteristics, finding ered in the economic and management literature those that workers care most about is important involve worker empowerment, broadly defined as to improving firm performance. improving worker-management communication Several recent papers find that positive working and increasing worker decision-making power. conditions can lead to higher firm value, which There is also a sizable literature on the link may be a function of improved firm performance. between HRM policies and firm performance A recent debate centers on the findings of Huselid that draws from both management and econom- (1995) that positive working conditions are cor- ics. Most of this literature, however, focuses on related with lower turnover, higher profits, and developed countries. As a result, the following increased firm value. As an example of specific literature review focuses on developed countries job characteristics valued by workers, Leblebici and, when possible, draws connections to devel- (2012) finds that 100 percent of employees oping countries. strongly agree that supervisor relations affect their Studies that focus on the link between HRM productivity. Jones, Kalmi, and Kauhanen (2010) policies and firm performance date back at least and Lazear and Shaw (2011) find that incentive Chapter 6: Improvements in Working Conditions and Firm and Industry Performance | 75 pay and teams contribute to productivity. Singh all, if there were policies that could improve (2004) finds that training and compensation factory performance—HRM policies or other increased perceived market performance. Using policies—factory managers would already have data from Better Work Vietnam, Rourke (2014) implemented them. The argument that factory finds that factory profits decrease as worker managers optimize their policies is extremely concern over verbal abuse increases. While this powerful and is a fundamental tenet of economic causality has been debated (e.g., Wright et al. analysis. Whether the optimizing behavior of 2005), meta-analyses (Combs et al. 2006; Judge managers leads to optimal HRM policies, how- et al. 2001), and broad literature reviews (Bloom ever, rests on a number of assumptions. and Van Reenen 2010 and Croucher et al. 2013) One of the most important of these assump- suggest an emerging consensus of a positive tions, which was mentioned earlier in the discus- relationship between working conditions and sion of the literature, is “perfect information.” The firm performance generally. assumption is that if firms are aware of the entire Other studies have suggested that the effects of set of possible policies, they will choose those improving working conditions may vary across that are best for their factories. Unfortunately, firms and workers with different characteristics. firms may not always have perfect information. For example, in the United States, the connection In an influential study, Bloom and others’ (2013) between HRM and firm performance may depend Indian experiments show that factory managers on whether or not workers are well educated increased productivity after receiving “new” (Shaw, Park, and Kim 2013) or implemented information about organizing the workplace.1 effectively (Black and Lynch 2001). Jones, Kalmi, The main message from these studies is that and Kauhanen (2010), however, offer evidence there is mounting empirical evidence against the suggesting that productivity gains occur even perfect information assumption. If firms do not when employees are doing simple tasks and are have perfect information, then outside efforts, relatively low skilled, so more studies in this area especially in the form of advisory services, are are clearly needed. more likely to introduce firms to policies that Although some specific areas of contention might improve factory performance. remain, there seems to be a growing consensus Bloom et al. (2013) focus on India and, as that improvements in HRM are linked to higher such, help bridge the gap between the literature worker productivity. This seems to be intuitive described above that focuses on factories in as it is not hard to imagine that in a positive developed countries and factories in developing work environment, workers will perform more countries. Some studies, such as de Grip and Sieben effectively than they would in a negative work (2005), find that the lack of information may be environment. These results raise the question especially problematic in smaller firms. It is well of whether external pressure to improve fac- known that developing country factories tend to tory conditions might actually generate positive be smaller than their developed country counter- results for factories as well as workers. The main parts. In this regard, if obtaining information is a argument against external pressure to improve “fixed cost” for factories, larger firms will have HRM policies is that factory managers have an lower costs of discovering new approaches that innate incentive to optimize factory performance might be helpful to the firm. The implication is and therefore will choose the HRM policies that that outside efforts would be especially helpful are optimal for the factory. As a result, outside in developing countries. pressure can only make the factory worse off. A second important point is that improve- ments in working conditions only affect worker Are Current HRM Policies Optimal? One of the fundamental assumptions economists 1 The consulting industry, in which management information is often make is that factory managers optimize shared and acquired, is huge. In 2013 estimated revenue for pro- their policies with the goal of maximizing prof- fessional, scientific, and technical services was about US$1.5 tril- lion dollars. Estimated employment in the sector in 2012 was over its to their firms. As a result, external pressure 8 million people. See http://www.census.gov/econ/isp/sampler cannot improve factory performance. After .php?naicscode=54161&naicslevel=5. 76 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector behavior if workers understand and value the compete in the global market. To address that con- improvements (Khilji and Wang 2006; Kuvaas, cern, we examine the change in national apparel Dusvik, and Buch 2014; Bowen and Ostroff exports before and after joining Better Work for 2004). If managers do not know the value that the treatment and comparison countries using a workers place on different job characteristics, global database of world apparel trade. The work efforts to improve working conditions with the presented here is based on a cross-country analysis goal of eliciting more effort from workers may using available data, which may be valuable in be ineffective. Helliwell and Huang (2005, 2007) making the broader argument that the benefits and Helliwell, Huang, and Putnam (2009) find from programs such as Better Work can extend that firms in Canada appear to undervalue the beyond firms to industries as a whole. importance of trust and workplace social capital. Moving 1 point on a 10-point workplace trust Microeconomic Evidence from Better scale has the same effect on global life satisfaction Work as a 40 percent increase in income. In practice this Brown, Dehejia, and Robertson (2014) analyze finding implies that firms may make inefficient the relationship between factory-level compliance HRM decisions. Herzog and Schlottmann (1990), and factory survival. They find that factories that analyzing U.S. Census data (1965–70), find that increase compliance between the first and second workers were willing to give up more than enough visits of the BFC are more likely to survive than wages to cover the costs of improving workplace factories that do not increase compliance. For safety. Using data from Better Work Vietnam, example, factories that increased their compli- Domat et al. (2013) find significant differences ance in payment of wages to workers had higher between manager perceptions of worker’s value survival rates than factories that did not increase of working conditions and worker’s expressed compliance in this area (Figure 6.2). These results preferences. control for the characteristics of the factories If firms do not necessarily know the optimal that affected initial compliance, which suggests HRM policies, information from outside sources, that the changes in compliance were likely due such as governments or nongovernmental orga- to the BFC program. In addition, the results seem nizations, may help them realize the productive to be stronger in areas that are consistent with potential from improving working conditions. the HRM literature. Higher compliance in wage Alternatively, and perhaps ideally, empowering payments, for example, is likely to affect worker workers so they can speak for themselves to effort and therefore increase the performance express their desired needs can help firms to arrive of the factory. These results are consistent with at optimal HRM policies. Worker empowerment Asuyama et al. (2013), who find that Cambodian can in turn be facilitated by BW or other outside productivity increased at the same time that other influences. studies were demonstrating significant increases in factory compliance. Arias-Vazquez, Gamberoni, and Nguyen’s unpublished research from Vietnam Evidence from Better Work shows that wages at Better Work factories are There are several possible ways to analyze whether higher than those of comparable factories not or not the improvements linked to Better Work participating in the Better Work program. Profits, are associated with improved firm and industry however, are comparable between the two groups, performance. We review two of them here. The which suggests that Better Work factories are first is on the microeconomic level, and the second able to support higher wages without adversely is on the macroeconomic level. The microeconomic affecting profits. level has been widely written about. Here, we pre­ sent information from Cambodian and Vietnamese Macroeconomic Evidence from firms. The focus on the macroeconomic level is Better Work motivated by the concern that participating in As explained earlier, the BFC program began as Better Work would raise firm costs and therefore part of a trade agreement that offered Cambodia make it more difficult for participating firms to increased quota access under the Multi-Fibre Chapter 6: Improvements in Working Conditions and Firm and Industry Performance | 77 Figure 6.2: Survival Rates of Factories Survival rates: Compliance with payment of wages 1.00 0.75 0.50 0.25 0.00 0 2 4 6 8 10 Visit number Not improved Improved Source: Brown, Dehejia, and Robertson 2014 Arrangement (MFA). The MFA, however, was Appendix G). The gravity model is the standard phased out completely in December 2004. At empirical tool used to analyze trade volumes and the time, there was concern that the end of MFA has been applied in hundreds, if not thousands, would either eliminate the incentive to participate of studies (Evenett and Keller 2002, Hanson and in the BFC program or reduce exports from Cam- Xiang 2004 are just two notable examples). The bodia as production shifted to China because the basic idea behind the gravity model is that trade improvements associated with the BFC program volumes between any two countries can be mod- increased costs in Cambodian factories. In either eled as a function of the size of each economy, case, exports from Cambodia were expected to often measured as gross domestic product (GDP) fall. However, as shown in Figure 6.3, exports per capita, the distance between the two countries, continued to increase: Cambodia’s exports did and a varied list of other possible factors that not decline following the end of the MFA, and might affect trade, such as sharing a common its export performance was only disrupted tem- border, a common language, resource differences, porarily during the financial crisis of 2008–09 trade agreements, and so on. before recovering strongly after the crisis. This For this exercise, we focus on apparel trade2 anecdotal evidence raises the possibility that par- (rather than trade in all goods). To emulate a ticipation in the BFC program specifically, and difference-in-difference approach, we create a perhaps the BW program generally, is associated with higher exports. To evaluate this hypothesis more formally, we 2 We use Harmonized System categories 62 and 63. See https:// estimate a gravity model of apparel trade (see www.foreign-trade.com/reference/hscode.htm. 78 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Figure 6.3: U.S. Apparel Imports from Cambodia 250 120 100 200 Quantity (million SME) Value (millions) 80 150 60 100 40 50 20 2000 2002 2004 2006 2008 2010 2012 Time period Value (millions US$) Quantity (millions SME) Source: Authors’ elaboration using data from the U.S. Dept. of Commerce, OTEXA dummy variable for the countries participating the sample to those countries exporting to the in Better Work, a dummy variable for the time United States. The total number of observations, periods in which the countries participate in Bet- therefore, falls to 4,740. The results are shown ter Work, and an interaction term that is equal to below in Table 6.1. one for the observations in which countries are The results in Table 6.1, which are meant to in Better Work (and zero for all other countries be suggestive rather than definitive, are consis- and time periods). The resulting database consists tent with the “usual” gravity model results in of the pair-wise trade relationship for the years the sense that country size (as measured as GDP 1992–2012 for all apparel-trading countries in per capita) has a large, positive, and significant the world for which data are available (more effect on trade, and distance has the usual large, than 100 countries are included). Country pairs negative, and significant effect on trade. We also appear twice in the data to capture the differences control for trade prior to participating in BW. between imports and exports. When identifying The main result of interest is the Time in Better Better Work countries, therefore, we focus on just Work variable. The estimated coefficient is large, the pairs in which the Better Work countries are positive, and statistically significant, which sug- exporters. The observations, then, are the indi- gests that being in the Better Work program is vidual country pairs, such as Cambodia and the associated with very large increases in apparel USA, Cambodia and France, France and Mexico, exports—both to the world generally and to the and so on. The total number of observations is United States in particular. about 426,000 for the world sample. The important point to make about these results For each country, we estimate the gravity model is that the large and positive effects of being in over two samples. The first sample includes all the Better Work program are not the result of countries as both importers and exporters. The the time period (e.g., Better Work participation second sample is limited to just the United States coinciding with a period of rising demand for being the importer. The U.S. sample restricts apparel generally) because the estimated effects Chapter 6: Improvements in Working Conditions and Firm and Industry Performance | 79 Table 6.1: Better Work Gravity Model Table 6.2: Better Work Regression Regression Results Results with Inputs Variables World USA Variables World USA Better Work country 1.435*** 3.385*** Better Work country 0.670*** 1.639*** (0.080) (0.771) (0.072) (0.533) Time in Better Work 2.273*** 4.620*** Time in Better Work 1.277*** 1.929*** (0.039) (0.360) (0.036) (0.260) Importer GDP/cap 1.607*** Importer GDP/cap 1.556*** (0.004) (0.004) Exporter GDP/cap 1.042*** 0.975*** Exporter GDP/cap 0.275*** –0.231*** (0.005) (0.046) (0.005) (0.037) Distance –1.499*** –0.465*** Knit imports 0.216*** 0.907*** (0.010) (0.138) (0.006) (0.043) Constant –5.153*** 9.960*** Narrow imports 0.235*** 0.525*** (0.108) (1.419) (0.007) (0.056) Observations 426,292 4,740 Woven imports –0.577*** –0.765*** R-squared 0.351 0.133 (0.007) (0.053) Yarn imports 0.800*** 0.499*** Note: Standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. Year effects included but not shown to save space. (0.006) (0.048) GDP/cap and distance are estimated as natural logs. Distance –1.597*** –0.524*** (0.009) (0.097) are the difference between Better Work countries Constant –6.862*** 4.567*** and non-Better Work countries holding time (0.106) (1.010) period effects constant. Furthermore, the results do not stem from Better Work countries being Observations 426,292 4,740 simply more significant exporters, because the R-squared 0.489 0.588 estimated Time in Better Work coefficient cap- tures the difference between the time when the Notes: *** p<0.01, ** p<0.05, * p<0.1. Standard errors Better Work countries were not in the program in parentheses. Year effects included in estimation but excluded from Table to save space. The imports are and when they entered. specific to each exporting country but vary across time. One concern readers may have about the results is that they do not control for other relevant fac- tors that affect apparel trade. To control for other countries increased (significantly) after entering relevant factors, we include imported intermediate BW. If BW were simply raising costs to apparel inputs. Imported intermediate inputs help control producers, such increases in exports would be for country-specific trends as well as national extremely unlikely as exports would probably productive capacity and efficiency. Note that the fall as costs increase. The large positive estimates gravity results when imported intermediate inputs suggest the opposite: Consequently, BW may be are included (Table 6.2) are very similar to the helping the apparel sector expand. Furthermore, previous results. In particular, the results suggest the effects are larger when the importing country that the Better Work countries export more than is restricted to being the United States. Overall, other countries, but the Time in Better Work is the results suggest that Better Work is associated large, positive, and significant. This coefficient with rising apparel exports when compared to estimate implies that apparel exports from BW relevant comparison countries. 80 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Diep’s Story Age: 40 Years working in garment sector: 17 As the HR, Admin, and Compliance Manager for a factory in Vietnam with over 2,500 employees, Diep has her hands full. But she loves her job and has gradually worked her way up the ranks, spending a total of 17 years at one factory, something that is not very common in the apparel industry. She has been in her current position for over 7 years and has seen many improvements in that time. Diep spoke to several specific benefits that she attributed to the presence of the Better Work program in her factory. First, the creation of the PICC (performance improvement consultative committees) has enabled the factory to better resolve in-house problems. For example, the PICC realized that workers were having a high number of accidents when operating the button-punching machine. They then devised a plan to address it, which included monitoring of the work stations to ensure that a proper safety protocol was followed in addition to having work- ers who had accidents on this specific machine to join the supervisory team and help convince other workers of the importance of following the safety protocol. Diep happily reported that ever since the introduction of the PICC initiative, the number of accidents to button-punching machine operators has fallen substantially. Second, Diep spoke about the benefits provided by BW trainings. They received train- ings in workplace cooperation, professional safety, and organizational skills. She reported three concrete positive outcomes as a result of the trainings: (1) an improved collective bargaining process, (2) reinforced use of personal protective equipment (PPE) among workers, and (3) improved dialogue between workers and factory management. Finally, Diep also linked the improvements brought about by the BW program to higher productivity. In her own words: “Thanks to Better Work Program, we have a better work- ing environment. The workers are happier and are more committed to the factory. And then we have significantly reduced our turnover. Thanks to the Better Work Program, we’ve increased our productivity. Also, the products are much improved, and we have more clients.” From 2000 to 2013, the factory where Diep works more than tripled its sales, reaching US$90 million last year. And her factory’s monthly output is now roughly 1.1 million pieces. Chapter 6: Improvements in Working Conditions and Firm and Industry Performance | 81 References Brown, Drusilla, Rajeev Dehejia, and Raymond Robertson. 2011. “Working Conditions and Arias-Vazquez, Javier, Elisa Gamberoni, and Factory Survival: Evidence from Better Facto- Cuong Nguyen. 2014. Unpublished. “The ries Cambodia.” Better Work Discussion Paper Effect of Better Work Programme on Firms’ Series 4, International Labour Office, Geneva. Performance in Vietnam.” Paper commissioned ———. 2014 “Is There an Efficiency Case for Inter- for this report. national Labor Standards?” Macalester College. Asuyama, Yoko, Dalin Chhun, Takahiro Fukuni- Brown, Drusilla, Rajeev Dehejia, George Domat, shi, Seiha Neou, and Tatsofumi Yamagata. 2013. Raymond Robertson, and Selven Veeraragoo. “Firm Dynamics in the Cambodian Garment 2015. “Are Sweatshops Profit-Maximizing? Industry: Firm Turnover, Productivity Growth, Answer: No: Evidence from Better Work and Wage Profile under Trade Liberalization.” Vietnam.” Better Work Discussion Paper 17, Journal of Asia Pacific Economy 18 (1): 51–70. International Labour Office, Geneva. Asuyama, Yoko, Takahiro Fukunishi, and Ray- Combs, James, Yongmei Liu, Angela Hall, and mond Robertson. 2015. “Labor Compliance David Ketchen. 2006. “How Much Do High‐ and Firm Performances: Evidence from Cambo- Performance Work Practices Matter? A Meta‐ dian Garment Industry.” Unpublished working Analysis of Their Effects on Organizational paper, IDE-JETRO. Performance.” Personnel Psychology 59: 501–28. Bandiera, Oriana, Iwan Barankay, and Imran Croucher, Richard, Bianca Stumbitz, Michael Rasul, 2007. “Incentives for Managers and Quinlan, and Ian Vickers. 2013. “Can Better Inequality Among Workers: Evidence from a Working Conditions Improve the Performance Firm-Level Experiment.” Quarterly Journal of of SMEs? An International Literature Review.” Economics 122 (2): 729–773. International Labour Office, Geneva. Basu, Arnab. K., Nancy H. Chau, and Ulrike Grote. Domat, George, Paris Alder, Rajeev Dehejia, 2006. “Guaranteed Manufactured without Child Drusilla Brown, and Raymond Robertson. Labor: The Economics of Consumer Boycotts, 2013. “Do Factory Managers Know What Trade Sanctions, and Social Labeling.” Review Workers Want? Manager-Worker Information of Development Economics 10 (3): 466–91. Asymmetries and Pareto Optimal Working Beresford, Melanie. 2009. “The Cambodian Cloth- Conditions.” Better Work Discussion Paper 10, ing Industry in the Post-MFA Environment: A International Labour Office, Geneva. Review of Developments.” Journal of the Asia Evenett, Simon J., and Wolfgang Keller. 2002. Pacific Economy 14 (4): 366–88. “On Theories Explaining the Success of the Better Work. 2014. “Health and Safety in the Gar- Gravity Equation.” Journal of Political Economy ment Industry.” http://betterwork.org/global/ 110 (2): 281–316. wp-content/uploads/Infographic-HR.pdf. Fung, Archon, Dara O’Rourke, and Charles Sabel. Black, Sandra E., and Lisa M Lynch. 2001. “How 2001. Can We Put an End to Sweatshops? to Compete: The Impact of Workplace Practices Boston Beacon Press. and Information Technology on Productivity.” Grip, Andries de, and Inge Sieben. 2005. “The The Review of Economics and Statistics 83 Effects of Human Resource Management (3): 434–45. on Small Firms’ Productivity and Employees Bloom, Nicholas, Benn Eifert, Aprajit Mahajan, Wages.” Applied Economics 37 (9): 1047–54. David McKenzie, and John Roberts. 2013. “Does Hackman, J. Richard., and Greg R. Oldham. 1976. Management Matter? Evidence from India.” “Motivation through the Design of Work: Test The Quarterly Journal of Economics 128: 1–51. of a Theory.” Organizational Behavior and Bloom, Nicholas, and John Van Reenen. 2010. Human Performance 16, 250–79. “Human Resource Management and Productiv- Hamilton, Barton H., Jack A. Nickerson, and ity.” Working Paper 16019, National Bureau Hideo Owan. 2003. “Team Incentives and of Economic Research. Worker Heterogeneity: An Empirical Analysis Bowen, David, and Cheri Ostroff. 2004. “Under- of the Impact of Teams on Productivity and standing HRM-Firm Performance Linkages: Participation.” Journal of Political Economy The Role of the ‘Strength’ of the HRM System.” 111(3): 465–97. Academy of Management Review 29: 203–21. 82 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Hanson, Gordon, and Chong Xiang. 2004. “The Kuvaas, Bard, Anders Dusvik, and Robert Buch. Home-Market Effect and Bilateral Trade Patterns” 2014. “Antecedents and Employee Outcomes American Economic Review 94 (4): 1108–29. of Line Managers’ Perceptions of Enabling HR Helliwell, John F., and Haifang Huang. 2005. Practices.” Journal of Management Studies 51 “How’s the Job? Well-Being and Social Capi- (6): 845–68. tal in the Workplace.” Working Paper 11759, Lazear, Edward, and Kathryn L. Shaw. 2011. “A National Bureau of Economic Research. Personnel Economics Approach to Productiv- ———. 2007. “Well-Being and Trust in the Work- ity Enhancement.” Nordic Economic Policy place.” http://www.cerforum.org/conferences/ Review 2: 209–51. 200705/papers/HelliwellHuang.pdf. Leblebici, Demet. 2012. “Impact of Workplace Helliwell, John F., Haifang Huang, and Rob- Quality on Employee’s Productivity.” Journal ert D. Putnam. 2009. “How’s the Job? Are of Business, Economics and Finance 1: 38–49. Trust and Social Capital Neglected Workplace McGregor, Douglas M. 1960. The Human Side Investments?” In Social Capital Reaching Out, of Enterprise. New York: McGraw Hill. Reaching In, edited by Viva Ona Barktus and Pike, Kelly, and Shane Godfrey. 2012. “Lesotho’s James H. Davis, 87–142. Northampton, MA: Apparel Industry: What Is the Role for Better Edward Elgar Publishing. Work?” Better Work Working Paper. http://bet- Herzog, Henry W., Jr., and Alan M. Schlottmann. terwork.com/global/wp-content/uploads/Session- 1990. “Valuing Risk in the Workplace: Market 8-Lesotho%E2%80%99s-Apparel-Industry.pdf. Price, Willingness to Pay, and the Optimal Polaski, Sandra. 2006. “Combining Global and Provision of Safety.” Review of Economics and Local Forces: The Case of Labor Rights in Cam- Statistics 72: 463–70. bodia.” World Development 34 (5): 919–32. Huselid, Mark A. 1995. “The Impact of Human Polaski, Sandra. 2009. “Harnessing Global Forces Resource Management Practices on Turnover, Pro- to Create Decent Work in Cambodia.” Inter- ductivity, and Corporate Financial Performance.” national Institute for Labor Studies, Better Academy of Management Journal 38: 635–72. Work, IILS Research Series 119, Interna- Ichniowski, Casey, Kathryn Shaw, and Giovanna tional Labour Office. http://www.ilo.org/inst/ Prennushi. 1997. “The Effects of Human publication/research-series/WCMS_193763/ Resource Management Practices on Productiv- lang--en/index.htm. ity: A Study of Steel Finishing Lines.” American Rourke, Emily L. 2014. “Is There a Business Case Economic Review 87 (3): 291–313. Against Verbal Abuse? Incentive Structure, IFC (International Finance Corporation). 2013. Verbal Abuse, Productivity and Profits in Gar- “Investing in Women’s Employment: Good for ment Factories.” Better Work Discussion Paper Business, Good for Development.” http://www Series, No. 15. .ifc.org/wps/wcm/connect/5f6e5580416bb Shaw, Jason, Tae-Youn Park, and Eugene Kim. 016bfb1bf9e78015671/InvestinginWomens 2013. “A Resource-Based Perspective on Employment.pdf?MOD=AJPERES. Human Capital Losses, HRM Investments, Jones, Derek C., Panu Kalmi, and Antti Kauhanen. and Organizational Performance.” Strategic 2010. “Teams, Incentive Pay, and Productive Management Journal 34: 572–89. Efficiency: Evidence from a Food-Processing Sheehan, Maura. 2013. “Human Resource Man- Plant.” Industrial and Labor Relations Review agement and Performance: Evidence from Small 63 (4): 606–26. and Medium-Sized Firms.” International Small Judge, Timothy A., Carl J. Thoresen, Joyce E. Business Journal 0 (0): 1–26. Bono, and Gregory K. Patton. 2001. “The Job Singh, Kuldeep. 2004. “Impact of HR Practices of Satisfaction-Job Performance Relationship: A Perceived Firm Performance in India.” Pacific Qualitative and Quantitative Review.” Psycho- Journal of Human Resources 42: 301–17. logical Bulletin 127: 376–407. Wright, Patrick M., Timothy M. Gardner, Lisa M. Khilji, Shaista E., and Xiaoyun Wang. 2006. Moynihan, and Matthew R. Allen. 2005. “The “‘Intended’ and ‘Implemented’ HRM: The Relationship between HR Practices and Firm Missing Linchpin in Strategic Human Resource Performance: Examining Causal Order.” Per- Management Research.” International Journal of sonnel Psychology 58: 409–46. Human Resource Management 17 (7): 1171–89. Chapter 7: Expansion to Other Factories Highlights Evidence of spillover effects—factories learning from other factories about human resource L management due to incentives related to improve productivity—has been mixed. Therefore, intervening efforts by a third party such as Better Work (BW) seem warranted. Incentives for improvements in working conditions can be provided to governments of L apparel-producing countries and to apparel firms. There are two dominant BW models at the country level: one in which participation is L voluntary and one in which it is mandated through regulations. If human resource management (HRM) poli- While relatively straightforward conceptually, cies are a form of technology, then it is possible the empirical literature suggests that such spillover that improving HRM policies in some factories effects are not automatic. In this chapter, we treat will encourage other factories to adopt simi- HRM as a technology and explore evidence of lar measures. Also, workers moving between “technological spillover.” We then examine ways factories may start expressing a preference in which incentives can be provided, both to for better conditions, which might persuade governments of apparel-producing countries and other factories to improve conditions to attract to apparel-producing firms. The pros and cons workers. Alternatively, factory managers may of operating models that Better Work has been communicate with each other and share their using to expand to more factories in a country are experiences. If those experiences are positive, also discussed. Finally, this chapter introduces a then other factories may follow their example case study of Kenya as a hypothetical candidate and improve conditions. for the Better Work program. 83 84 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector In Search of Spillover Effects other factories endogenously, which is consistent with much of the literature on technology diffu- Much of the literature that focuses on technology sion. The lack of evidence of a spillover effect diffusion focuses on multinational corporations suggests that external efforts may be needed to (MNCs) and foreign direct investment (FDI), introduce beneficial HRM policies. which include evidence of positive, negative, and zero spillovers. For example, Todo and Miyamoto (2002) analyze Indonesian data and find that the Incentivizing Government Action FDI from MNCs used in research and develop- Evidence has shown that incentives for govern- ment (R&D) activities positively and significantly ments of apparel-producing countries can improve influences domestic firms’ productivity, which working conditions in apparel factories. A prime the authors argue is evidence that the spillovers example is the creation of the BFC program that only occur with the presence of MNCs. Sahu and stemmed from a U.S.-Cambodia Trade agreement. Solarin (2014) also find positive and significant Similarly, the Haitian Hemispheric Opportunity spillovers to domestic firms. R&D is among through the Partnership Encouragement Act of the most important factors in this relationship. 2008 (HOPE II) offers special trade preferences Because apparel firms are unlikely to invest in to Haiti in exchange for compliance with core R&D in HRM policies, an external stimulus labor standards. In this regard, the Better Work may be necessary to motivate firms to adopt new Haiti program was launched in 2009 and covers human resource policies. all garment factories in Haiti exporting to the U.S. In contrast to the positive effect of R&D on market. Existing avenues for incentivizing govern- technology spillovers from Indonesia data, Lòpez- ments to support programs like Better Work—such Garcia and Montero (2010) analyze Spanish firm as benefits from gaining export markets, welfare data from 2003 to 2007 and find limited effects. benefits for their citizens, and improved produc- Aitken and Harrison (1999) find that the spillover of tivity of local businesses—have been addressed in foreign ownership on Venezuela’s domestic economy earlier chapters of this report. However, incentives is believed to be small. With data from 40 studies of that are directed to the government could also manufacturing industries in developed, transition, help provide an additional push. and developing economies, only 22 studies saw This section will explore ideas related to the positive and statistically significant intra-industrial two main types of incentives that have generally spillovers (Gorg and Greenaway 2004). Chudnovsky, been discussed with governments of garment- Lopez, and Rossi (2008) find that on average there producing countries. The first has to do with is a neither positive nor negative spillover effect from the possibility of linking Better Work or other transnational corporations to domestic firms in the measures to improve working conditions with Argentine manufacturing sector. international trade negotiation, including unilat- In a paper commissioned for this study, Arias- eral trade preference programs and bilateral and Vazquez, Gamberoni, and Nguyen’s unpublished multilateral agreements. The second are those research from Vietnam matched Better Work (BW) linked to development finance. factories with non-BW neighboring factories and compared various measures of working conditions and firm performance. Although data on working Trade Agreements conditions are quite limited for non-BW factories The United States is a major player in interna- (they used industrial census data, which does not tional trade and has been active in labor issues. focus on working conditions), they found very The U.S. government, through the Department of limited, if any, evidence of spillovers to neighbor- Labor and the Office of the United States Trade ing factories. Having more BW factories in the Representative, can influence working conditions same district, for example, had no statistically around the world by negotiating labor rights significant effect on observed factory variables. language in new trade and investment agreements The implications of their work seem to be that and trade preference programs. the improvements in either working conditions An example of an ongoing trade preference or factory performance are unlikely to spread to program is the African Growth and Opportunity Chapter 7: Expansion to Other Factories | 85 Act (AGOA), which also has a focus on labor Trade and Investment Partnership, may be new standards. The U.S. government designates coun- opportunities to introduce mechanisms to improve tries as eligible to receive its benefits if they are working conditions and job quality. determined to have established, or are making continual progress toward establishing, the protec- Development Finance tion of internationally recognized worker rights. International Financial Institutions (IFIs) could As part of the annual AGOA eligibility review also work with client countries on policy reforms process, the U.S. government examines countries’ like Better Work in order to achieve their institu- efforts to implement and enforce internationally tions’ overarching goals such as poverty reduc- recognized worker rights in various dimensions, tion and gender equality. Many IFIs have budget including acceptable working conditions with support programs that can serve as a platform respect to minimum wages, work hours, and for collaborating with governments of garment- occupational safety and health. A study by the producing countries. The World Bank’s Develop- Brookings Institution identified progress that ment Policy Financing (DPF) is provided in the has been made since the introduction of AGOA form of non-earmarked loans, credits, or grants in 2000. AGOA has helped tackle inequality in that support the country’s economic and sectoral African countries by creating more employment policies and institutions through, for example, opportunities, especially for women (Karingi et al. measures to improve public finance or the invest- 2010). Moreover, AGOA aimed to help boost ment climate, diversify the economy, and create the development of the garment industry across employment. Reform measures similar to Better Africa by encouraging the development of regional Work are consistent with this goal because they value chains. Its rules of origin allow beneficiary aim to improve the efficiency of the supply chain countries to qualify for the minimum local input/ of garment and textile industries (or other labor- processing requirements of using inputs from intensive sectors) while improving the poor’s other AGOA beneficiaries (Moyo and Page 2010). well-being and closing gender gaps. Moreover, However, few countries in Africa have taken full Better Work also builds on a solid foundation advantage of AGOA’s benefits. Only Lesotho and of public-private partnership, which is one of Mauritius have taken advantage of the law and the key policy directions that the World Bank is developed an apparel export industry. advocating for at the corporate level. Similarly, Whether or not labor standards should be incentive programs like those of the United States’ imposed through trade agreements has not been Millennium Challenge Corporation (MCC) could without controversy. Maskus (1997), for example, include the expansion and implementation of the casts doubt on the prospects for labor standards Better Work program. to be enforced through trade agreements and argues for more effective alternatives such as International Labour Organization (ILO) moni- Mandatory versus Voluntary toring and publicity efforts and compensation Subscription programs from wealthy to poor countries. Yet, As we think about how the impact of BW can our analysis leads us to conclude that countries be scaled up, we must first understand the two with large markets like the United States can be dominant models of the BW approach. The first effective in negotiating high labor standards in approach is the mandatory model, which has been trade agreements, particularly those related to implemented in Cambodia, Haiti, and Jordan. working conditions. In this regard, establish- Under this model, governments mandate export- ing programs such as Better Work could be ing apparel factories to subscribe to the Better part of these agreements to ensure the effective Work program by only issuing export licenses implementation of agreements, particularly in to factories working with BW. The advantage of developing countries characterized by weak gov- this approach is that the country can maintain ernance structures and low enforcement capacity. an industrywide reputation for ethical sourcing. Possible upcoming trade agreements, such as the However, the approach also has some drawbacks. Trans-Pacific Partnership and the Transatlantic The program cannot be truly industrywide due to 86 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector the presence of subcontracting factories, which lines. The following section considers the role of do not require export permits and thus are not external stakeholders in more detail. required to participate in BW. In Cambodia, the use of subcontracting factories represents a risk Financial Incentives for Firms in sourcing. Moreover, implementing the program Financial incentives from credit lines have been industrywide does not automatically imply that used with success to promote the Better Work the factories subscribed to BW will participate program at the firm level. This type of financial in the advisory services and training offered by incentive can make a big push for firms in textile BW. In Cambodia, where more than 500 factories and apparel sectors to improve their working are subscribed to the program, the BFC office is conditions. According to IFC research, only still trying to increase participation in advisory 10  percent of exporters in emerging markets and training services. To date, only 65 factories actually have access to supply chain finance. But have received advisory services, and roughly 400 many local commercial banks in emerging markets factories have participated in at least one of the have limited financial products for suppliers and BW training modules. exporters to finance sales not backed by letters of The second approach, in which program par- credit. The global banks that offer supply chain ticipation is voluntary, is the one that has been finance solutions often have little experience in implemented in the five remaining BW countries. these markets (IFC 2014). This approach can mean that more than half of In 2010 the IFC launched a new fund that the factories in a country are not subscribed to could help garment firms in Vietnam obtain BW, as in the case of Lesotho. Yet, it also means short-term finance to boost exports. The Global that BW can focus more on delivering advisory Trade Supplier Finance (GTSF) program is a services. While the Better Work Vietnam program $500 million fund that offers short-term credit drew heavily on the Better Factories Cambodia to mostly small- and medium-size exporters in (BFC) model, the government decided not to emerging markets, where access to traditional mandate BW industrywide. This decision has forms of financing may be constrained. Under the given the BW Vietnam office the ability to offer program, the IFC works with banks and buyers a bundle of services, which enables factories that across industries that source goods in emerging subscribe to BW to also receive advisory services. markets to help reach thousands of small- and This can be crucial as the advisory services help medium-size suppliers. factories to work on particular areas of concern In Vietnam, when considering lending to gar- that are identified through the assessments. ment businesses, the IFC will give preference to However, the BW Vietnam office also mentioned those that are enrolled in the Better Work pro- that they are struggling to market their training gram. This credit line will not only allow firms services and therefore have a much lower sub- to quickly convert sales into cash, but also enable scription to these services. A newly introduced them to access lower-cost finance based on the service delivery model will bundle training superior credit rating of their buyers. The same services with the rest of BW services (advisory consideration is now being used in Bangladesh. and assessment), so this issue is expected to be resolved (see Chapter 4, “a new Better Work model,” for a detailed description). Choosing an Expansion Path There are actions that other stakeholders can Given that the spillover effect of BW has yet undertake to help expand the reach of the BW to be substantiated, stakeholders must play an program. For example, in Jordan the government active role in expanding the program’s reach. The subsidizes the BW subscription fee for factories decision is primarily between a mandatory and based on the number of local employees they hire. voluntary model. While each has its merits, our In Vietnam, the IFC offers an incentive to firms analysis suggests that the mandatory option may who are judged to have improved compliance by be less desirable. The Cambodian garment sector BW, through providing them with low-cost credit still faces criticism for its poor labor standards, Chapter 7: Expansion to Other Factories | 87 Kenya: An Ideal Candidate for Better Work? To examine possible gains from implementing a program such as BW, we conducted a case study of Kenya, a country in Africa with a sizable garment sector. The field research focuses on workers’ perspective; thus, it is not meant to be taken as a policy recommen- dation that BW should be established in Kenya. For us to make that conclusion, other criteria would need to be evaluated, which includes, but is not limited to governmental laws, regulation and support, brand interest, and donor funding. The following discus- sion therefore offers a brief overview of the Kenya apparel sector before identifying key issues raised by the Kenya apparel workers through focus group discussions (FGDs). A program such as Better Work seems to be well positioned to address many of the con- cerns regarding job quality that the workers expressed. Mastamet­ -Masona and Ogembo­ -Kachienga (2012) identify the historically important role played by the Kenya apparel industry in the country’s economic development. Ever since gaining independence in 1963, the country has relied greatly on manufacturing output and textile and apparel production in particular. The textile and apparel sector developed rapidly and employed about 30 percent of the labor force in the national manufactur- ing sector in the mid-2000s. Currently, approximately 170 apparel companies operate in Kenya. Of these companies, approximately 16 companies are operating in the Export Processing Zone (EPZ) and employ an estimated 24,000 workers producing garments for export. Yet, the sector’s competitiveness has been seriously hampered by the loss of global markets following the elimination of the Multi-Fibre Arrangement (MFA) quotas regime at the end of 2004. Moreover, Kenya is also facing stiff competition from Asian countries that can produce apparel products at lower costs However, like many other countries in Africa, Kenya has benefited from duty-free access to the U.S. apparel market under the African Growth and Opportunity Act (AGOA). In addition to political support by the Kenyan government, buyers also suggest that African countries such as Kenya are well positioned to grow their apparel sectors (Manson 2014). The following section highlights the main complaints voiced by workers and details how a program such as Better Work could help to address these concerns. Long Working Hours without Pay. Several workers said they are working overtime without pay. Moreover, many workers spoke about the impact that working long hours has on their home life. The majority of female workers said working long hours is angering/ frustrating their husbands, who only tolerate it for a few nights and then leave them. Others said they are short tempered with their children. Overtime is a BW compliance point and thus this problem could at least be identified, and possibly rectified through BW assessments. The link between work and home-life satisfaction is also evident in this particular complaint. Our review has shown that improving work conditions can indeed have positive spillover effects on the quality of life outside factory walls. Health and Safety Issues. Basic health and safety measures, such as distribution of personal protective equipment, appears to be lacking, or, at best, inconsistent. This reflects a shortcoming with respect to occupational health and safety policy, which can be identified, and possibly then rectified, through BW assessments. (continued) 88 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Kenya: Continued Poor Relations with Supervisors. Workers talked about supervisors using harsh language an generally poor relations between workers and supervisors. BW supervisor trainings on communication could be conducted to equip supervisors with the necessary skills needed to better interact with workers. Barriers in Joining Unions. Some reported that their bosses discouraged them from joining a union (or that they were flat out denied the right to join a union). And if they did join, they felt they were discriminated against. This problem would fall under the BW freedom to associate compliance point. Lack of Adequate Dispute Resolution Process. If they have a grievance, workers do not take it to a dispute resolution body/organization. Instead, they take their griev- ances to their shop stewards. Many workers reported that they feel their grievances go nowhere. The performance improvement consultative committee (PICC) model that has proven so valuable is a clear solution here to help ensure that workers’ concerns are adequately heard and addressed. Favoritism along Tribal Lines. There is favoritism based on tribalism concerning hir- ing, allowing leave, giving overtime hours if workers want them, etc. This issue would be captured in the discrimination compliance point during BW assessment. Many of the problems raised could be addressed through a program like BW. Moreover, despite all the complaints the workers voiced, many said they appreciate having a job, despite poor job quality, because it means they can at least put food on the table. Because their working conditions are far from ideal, this reality reinforces the importance of programs such as BW that aim to improve working conditions in garment factories. and the BFC in particular has come under seri- subscribed to the program because its current base ous scrutiny (see International Human Rights of 16 factories makes it hard for the program to and Conflict Resolution Clinic and WRC 2013). recoup the substantial initial investments made These problems may occur because the program to establish the program. Perhaps, in a relatively has had to focus so much of its resources to fulfill minor apparel-exporting country such as Leso- assessment services for more than 500 factories, tho, a mandatory program may be preferable. and the factories may have become better able to Clearly, it depends on certain contextual factors “pass the audit” rather than making real improve- as to which approach a country should take, but ments and effecting genuine behavior change. we contend that ideally the voluntary approach The voluntary model, on the other hand, invites should be the predominant model. factories to join on their own volition, which means that while the program will not be active in as many factories, it may give the program a References critical mass of factories to work with in more Aitken, Brian J., and Ann E. Harrison. 1999. “Do close coordination. Domestic Firms Benefit from Direct Foreign Nevertheless, context clearly matters. In our Investment? Evidence from Venezuela.” Ameri- discussions with the BW office in Lesotho we can Economic Review 89 (3): 605–18. heard that the program would much prefer if all Arias-Vazquez, Javier, Elisa Gamberoni, and of the 40 apparel factories in the country were Cuong Nguyen. 2014. Unpublished. “The Chapter 7: Expansion to Other Factories | 89 Effect of Better Work Programme on Firms’ Innovation Gap: The Role of Spillovers and Performance in Vietnam.” Paper commissioned Firms’ Absorptive Capacity.” Banco de Espana for this report. Working Paper 1015. Banco de Espana, Madrid. Chudnovsky, Daniel, Andres Lopez, and Gas- Manson, Katrina. 2014. “Textiles Sector in Kenya ton Rossi. 2008. “Foreign Direct Investment Gears up to Take a Larger Share of World Spillovers and the Absorptive Capabilities of Market.” Financial Times, December 2. http:// Domestic Firms in the Argentine Manufacturing www.ft.com/cms/s/0/75b7273e-6040-11e4- Sector (1992–2001).” Journal of Development 88d1-00144feabdc0.html#axzz3Vzi10bEn. Studies 44 (5): 645–77. Maskus, Keith E. 1997. “Should Core Labor Stan- Gorg, Holger, and David Greenaway. 2004. “Much dards Be Imposed through International Trade Ado about Nothing? Do Domestic Firms Really Policy?” World Bank Development Research Benefit from Foreign Direct Investment?” World Group, Policy Research Working Paper 1817. Bank Research Observer 19 (2): 171–97. Washington DC: World Bank. International Finance Corporation. 2014. “Global Mastamet-­ Masona, Anne, and Michael Ogembo-­ Trade Supplier Finance: Creating Opportu- Kachienga. 2012. “Development of Competi- nity in Emerging Markets.” Program Flyer tive Advantage in Apparel Industry in Kenya.” April 2014. Retrieved from http://www.ifc Sociology Study 2 (5): 337–50. .org/wps/wcm/connect/industry_ext_content/ Moyo, Nelipher, and John Page. 2010. “AGOA ifc_external_corporate_site/industries/ and Regional Integration in Africa: A Missed financial+markets/trade+and+supply+chain/ Opportunity.” In AGOA at 10: Challenges and gtsf/ Prospects for U.S.-Africa Trade and Invest- International Human Rights and Conflict Reso- ment Relations. Washington, DC: Brookings lution Clinic and Worker Rights Consortium. Institution. 2013. “Monitoring in the Dark: An Evaluation Sahu, Pritish Kumar, and Sakiru Adebola Solarin. of the International Labour Organization’s 2014. “Does Higher Productivity and Effi- Better Factories Cambodia Monitoring and ciency Lead to Spillover? Evidence from Indian Reporting Program.” International Human Manufacturing.” Journal of Developing Areas Rights and Conflict Resolution Clinic, Mills 48 (3): 175–93. Legal Clinic, Stanford Law School and Worker Todo, Yasuyuki, and Koji Miyamoto. 2002. Rights Consortium. http://humanrightsclinic “Knowledge Diffusion from Multinational .law.stanford.edu/wp-content/uploads/2013/03/ Enterprises: The Role of Domestic and For- Monitoring-in-the-Dark-Stanford-WRC.pdf. eign Knowledge-Enhancing Activities.” OECD Karingi, Stephen N., Mwangi S. Kimenyi, Mekalia (Organisation for Economic Co-operation and Paulos, and Laura Páez. 2010. “Consolidating Development.) Development Centre, OECD Gains from Africa-U.S. Trade: Post-AGOA Development Centre Working Paper 196. Options Beyond 2015.” In AGOA at 10: Chal- Worker Rights Consortium. 2013. “Made in lenges and Prospects for U.S.-Africa Trade Vietnam: Labor Rights Violations in Vietnam’s and Investment Relations. Washington, DC: Export Manufacturing Sector,” May. http:// Brookings Institution. www.workersrights.org/linkeddocs/WRC_ Lòpez-Garcia, Paloma, and Jose Montero. Vietnam_Briefing_Paper.pdf. 2010. “Understanding the Spanish Business Chapter 8: Policy Implications of the Quest for Better Jobs Conclusions about the Better Work key conclusions about the BW program (summa- rized in Figure 8.1) that highlight lessons learned. Program 1. The Better Work program is an innovative We note that policy makers have traditionally approach to improving working condi- focused on promoting jobs as a development tions in apparel factories. The program is strategy and that the number of jobs alone may a comprehensive attempt to improve work- not be sufficient to alleviate poverty. Since job ing conditions that leverages the incentive quality also matters, it is therefore important to structure of stakeholders in the apparel value focus on recommendations to improve both job chain. Innovations that have contributed quality and quantity. Apparel is a labor intensive to improving working conditions include: industry with low barriers to entry for women consolidated factory assessment carried out relative to other globalized manufacturing sectors. by BW staff, unannounced factory visits, While expanding the apparel sector is important, and a comprehensive assessment process. these jobs do not have to be in sweatshop condi- Most importantly, BW complements assess- tions. The challenge is thus to work to improve job ment with advisory and training services to quality in the apparel sector and thereby increase facilitate behavioral change. the chances that these jobs will both advance gender equality and reduce poverty. 2. The effects of the BW program on factory Much of this report studies the Better Work conditions are strong and positive. Empiri- program as an example of how to improve job cal evidence largely shows that the program quality. The analysis in the report points to several has helped to improve working conditions 91 92 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Figure 8.1: Summary of Key Conclusions The Better Work program is an innovative approach to improving working conditions in apparel factories. The e ects of the BW program on factory conditions are strong and positive. Evidence indicates that the benefits of BW extend beyond factory walls. Evidence suggests that better working conditions are linked to higher productivity. To expand benefits, proactive interventions are needed. Other countries can greatly benefit from the introduction of the BW program. across countries. Significant improvements Nevertheless, more research is needed to have been made in occupational health and explore the causality between better work- safety. The relationship between workers ing conditions and better firm performance. and management has also improved with 5. To expand benefits, proactive interventions the support of performance improvement are needed. At present, impacts are restricted consultative committees (PICCs). These gains to active participant factories, but the effect are also sustainable, as shown by studies in of the BW program on factories that are not Cambodia. However, Better Work is not a subscribed to it are unclear. In this regard, panacea; challenges still remain. proactive interventions have the potential 3. Evidence indicates that the benefits of BW to harness spillover effects. extend beyond factory walls. Data point 6. The introduction of BW to other countries to the improvements that BW involve- could be greatly beneficial. Countries with ment has on workers’ lives at home. These similar issues to those of the countries improvements include, but are not limited where BW programs are currently in place to: a more equitable division of housework could greatly benefit from the introduction between spouses, less stress given more of BW program. Introducing BW to other appropriate overtime and leave allocation, garment-producing countries could be highly and knowledge about life skills (through beneficial since their conditions are similar training in communication skills, first aid, to those of Cambodia at the onset of the and financial literacy that workers can use program. The program, which has expanded in their personal lives. to Lesotho and other apparel-producing 4. Sweatshop conditions are not profit maxi- countries, has proven effective in a range of mizing. Empirical evidence suggests that bet- country contexts. Countries such as Kenya ter working conditions are linked to higher could benefit from the BW program (see the productivity and superior firm performance. case study of Kenya in Chapter 7). Chapter 8: Policy Implications of the Quest for Better Jobs | 93 Recommendations Moving Forward case, and finally, scaling up and ensuring the sustainability of initiatives such as BW. Many We offer the following recommendations (sum- of the recommendations, which are drawn from marized in Figure 8.2) to advance job quality the BW case study, are probably applicable to for garment workers. The recommendations are other programs seeking to improve job quality organized in terms of the main themes addressed in developing countries. The recommendations by each of the chapters in this report: within the have not been assigned to particular stakeholders factory, outside the factory, making the business Figure 8.2: Summary of Recommendations • Improve the relationship between workers and management. Improving quality of • Seek and incorporate workers’ input. work experience within • Step up e orts on occupational safety and health. the factory • Emphasize transparency and early compliance. • Focus on behavioral change. • Expand the reach and tailor the content of training modules. Improving workers’ lives • Capitalize on life skills for social change, outside the factory particularly on gender equality. • Expand workers’ access to finance. Making the business • Collect better data for monitoring. case for improved • Share knowledge on the link between working productivity with better conditions and firm performance. working conditions • Conduct more business-related research. • Emphasize impacts on workers’ lives in trade agreement negotiations. Expanding reach and • Explore sectors beyond apparel. • Leverage aid and budget support for policy reforms ensuring sustainability in the apparel sector. • Support and publicize sustained improvement. • Ensure program sustainability. 94 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector because they are all interconnected and stand to such as BW’s PICCs, suggest there is scope for gain by working together. developing a method to measure and systemati- cally monitor the “friendly relationship between Improving Quality of Work workers and management.” Such a monitoring Experience within the Factory tool could be useful for human resource (HR) The most direct way to improve the quality of managers in factories as it would enable them to jobs of garment workers is to ensure that they continuously gauge workers’ feelings on a variety are working in collegial, comfortable, and safe of issues, which would in turn directly contribute environments. This requires a comprehensive to workers’ satisfaction and productivity. and sustained approach. We offer several specific Step up Efforts on Occupational Safety and recommendations below based on lessons learned Health.  Compliance data from various methods from the BW experience. of analysis show that occupational safety and Improve the Relationship between Workers health (OSH) is one of, if not the, most significant and Management.  According to the worker area of concern. BW baseline noncompliance surveys in Lesotho, Vietnam, and Kenya, garment rates are high and stay high even with successful workers universally value a “good relationship improvement. The current approach is working, between workers and management” among the top but it may not be working fast enough. Moreover, four features for job quality. Therefore, improving some of the issues under OSH are more difficult to the relationship between workers and manage- change than others. Activities aimed at addressing ment could be a cost-effective way to improve these OSH issues as well as designing alternative job quality and motivate workers. In addition, methods of measuring compliance may need to stakeholders should enhance multicultural com- be considered. munication. The apparel industry is part of the Emphasize Transparency and Early Compli- global value chain, involving stakeholders from all ance.  One of the key findings from the mecha- over the world. Practical issues arise when people nism design literature is that transparency tends from different countries with different cultures to improve behavior. That is, when designing a and communication styles work side by side. In mechanism to align incentives and behavior, a lack addition, conflicts have arisen in many instances of transparency makes it more likely that agents before being remedied. Data show numerous will act in ways that are inconsistent with the cases of conflict between foreign supervisors and desired outcomes. Ang et al. (2012) show how this local apparel workers (particularly in Lesotho). idea applies in Cambodia. When the transparency In this regard, using local knowledge to try to of monitoring was reduced by the decision to no anticipate potential conflicts that might develop longer publish factory-specific reports, the rate of from cultural differences would help to improve improvement in compliance fell. At least in part communication between stakeholders. Training due to this finding, Better Factories Cambodia courses could also be designed based on experi- (BFC) recently reversed its policy and returned ence from countries that have been exposed to to a policy of posting factory-specific compliance foreign direct investment (FDI) for some time. reports. This idea has been echoed by BW crit- This could help prevent entrenched animosity ics, and transparency is now understood to be a that would be difficult to remedy at a later stage. helpful tool in improving compliance outcomes. Seek and Incorporate Workers’ Input.  Sur- In addition, factories should be encouraged to veys in four countries suggest that workers also comply as early as possible, given the knowledge want more than just core labor standards. Data that compliance tends to sustain. In this regard, from focus group discussions with workers consis- BW programs may have to put forth a great deal tently show that a collegial working environment of effort when new factories join the program is the most important factor in shaping their per- and schedule as many activities with the factory ceptions of job quality. In this regard, supervisory early on, while factoring in the absorptive capac- trainings and mechanisms designed to improve the ity of factories. Other mechanisms to encourage relationship between workers and management, factories to comply early might include setting Chapter 8: Policy Implications of the Quest for Better Jobs | 95 compliance targets and recognizing high perform- working with apparel workers could also increase ers with awards. the overall effectiveness of training programs. Focus on Behavioral Change.  Clearly change Capitalize on Life Skills for Social Change, in working conditions, especially in safety and Particularly on Gender Equality.  A common health, cannot come from efforts by factory man- theme across the three BW countries where we agement alone. It needs cooperation from workers conducted field research is that gender norms at to change their behavior. BW has already worked home are moving toward gender equality. Women closely with factories through its advisory service. use the communication skills that they learn from However, it may be worth exploring an alterna- BW to negotiate age-old gender norms. Tradition- tive approach, shifting the mindset away from ally, in most countries across the world, women “compliance for audits” to “self-improvement,” are assigned societal responsibilities concerning with some advice from outsiders. To this end, household chores. However, even as women the BW program is moving to a model whereby increasingly work outside the home, some societ- factories that sign up for the program are given ies remain slow to change, and women still bear an immediate 100-day period of advisory services, a disproportionate share of household chores. which is then followed by an assessment along With respect to this issue, surveys in case study compliance points.1 This approach might be a countries reveal encouraging patterns whereby good model for other programs as well. husbands increasingly help their wives with household chores. Given that the garment sec- Improving Workers’ Lives outside the tor employs a large number of women in formal Factory sector jobs, it appears that it is a driver for this Programs aimed at improving job quality need to social change. In addition, the data also suggest consider workers’ lives more broadly. Below we that training in communication skills from BW list several concrete actions designed to ensure has been a catalyst for this change. Clearly, there that program activities will not only benefit job is more opportunity to formally capitalize on life quality but also enhance workers’ quality of life. skills training. Expand the Reach and Tailor the Content Expand Workers’ Access to Finance.  The of Training Modules.  Empirical evidence sug- Cambodia workers survey shows that only about gests that offering training services is extremely six percent of female workers and eight percent of valuable for factories and workers. Currently, BW male workers have bank accounts, even though programs around the world offer training modules they work in formal sectors and are paid through on a wide variety of subjects, including labor formal channels. Thus, there is an opportunity to laws and rights, fire safety, and communication significantly improve workers’ access to finance, skills. If training comes at an extra cost, factories and financial products for garment workers should may be less likely to purchase such services. Yet, be adapted to meet their needs. Mobile banking some factories have indicated that training has could be an avenue worth exploring, given the been greatly beneficial and have expressed that high rate of cellphone ownership (about 92 percent they would be willing to pay higher rates than for both men and women). Interventions aimed at they currently pay, thus creating room to expand expanding access to finance could also be delivered training services. What is also important, is that in conjunction with financial literacy training, the training modules are developed to also take which has proven to be successful in Lesotho. into consideration possible benefits that extend beyond the factory. Such training modules include Making the Business Case for training in health and finance that are specifically Improved Productivity with Better tailored for factory settings. Moreover, coordi- Working Conditions nation between Better Work and other NGOs Businesses may be hesitant to implement policies to improve job quality for their employees. Yet, 1 For more information, see: http://betterwork.org/global/ after realizing the potential bottom line gains ?page_id=7380 to be had, they may be more likely to initiate 96 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector change. We suggest three actions in particular conditions, not just because it is the right thing to to strengthen the link between job quality and do, but also because it makes good business sense. firm profitability. Expanding Reach and Ensuring Collect Better Data for Monitoring. Data from workers surveys in our case study countries Sustainability have proven to be useful in capturing progress Active and engaged action is required to expand on compliance and revealing new issues related the reach of programs such as Better Work. More- to working conditions. Many interesting findings over, the sustainability of such initiatives needs emerged such as those relating to PICCs, wages, to be well thought out and ensured. and use of fixed-term contracts. In addition, Emphasize Impacts on Workers’ Lives outcome data are important. For example, in in Trade Agreement Negotiations.  Trade addition to monitoring compliance with occu- agreements and international discussions often pational safety rules, it would also be useful to include agendas related to labor rights. Although monitor the number of accidents. In addition, these issues are important, analysis in this report collecting data directly from workers would has shown that other aspects of workers’ lives are allow for a breakdown of the data by sex and also important. In this regard, trade is a powerful help stakeholders address gender gaps (some of tool leading to development gains. Gender equal- which could also disadvantage men). Such data ity is one of the key issues that many developed need not be collected only by BW; other stake- countries (who are also major apparel importers) holders, such as factory management and buyers tend to regard as an important policy agenda. At who want better information to help them make the same time, it may also be necessary to broaden better business decisions could also support efforts the audience in importing countries’ governments. to collect better data. Explore Sectors Beyond Apparel.  Garment Share Knowledge on the Link between factories are not the only sites often characterized Working Conditions and Firm Perfor- by poor working conditions. Many other labor- mance.  Recent research has shown that firms intensive manufacturing sectors can be considered. may not always have complete information about To this end, BW is preparing to expand into human resource management and how it can the shoe manufacturing industry in Cambodia. contribute to higher productivity. In addition to This expansion is natural because the shoe and increasing efforts to disseminate such knowledge, apparel industries share many similarities. The it would also be useful to explore ways that fac- food processing industry—particularly products tories could receive and share such information. destined for export markets—is another sector As effective modes of communication may differ that could benefit from a BW-type intervention. across garment-producing countries and types Canned tuna is a prime example of this industry. In of factories, a survey of BW enterprise advisers this regard, the food-processing industry in many across countries could recommend effective com- developing countries employs a large proportion munication strategies suitable for different types of low-skilled female workers. Concerns about of firms and environments. health, safety, and environmental degradation can Conduct More Business-Related attract the attention and scrutiny of consumers Research.  More research is needed to docu- in the West, which in turn could make buyers ment the positive impacts of improving working reputation sensitive. conditions on productivity and profitability. We Leverage Aid and Budgetary Support for have presented some research pointing to this Policy Reforms in the Apparel Sector.  Bilat- relationship, but if information on productivity eral donors and International Financial Institutions and compliance is more closely monitored, the (IFIs) could use their aid and budgetary support relationship could be further substantiated. In this to work with client countries on policy reforms case, we would expect a “race to the top” where like Better Work to improve working conditions. factories would actively seek to improve working Reform measures needed to implement Better Chapter 8: Policy Implications of the Quest for Better Jobs | 97 Work are consistent with donors and IFIs’ goals governments may be more willing to take on a because they aim to improve the efficiency of the larger financial burden. A possible way to help supply chain of the garment and textile industries ensure greater buy-in from factory managers, (and other labor-intensive sectors) while improv- buyers, and governments might be to recast the ing the poor’s well-being and closing gender gaps. message of improving working conditions as Moreover, Better Work also builds on a solid one of technology-sharing. Sharing technology foundation of public-private partnership, which that improves factories might be received differ- is one of the key policy directions that the World ently than externally imposed standards. Given Bank is advocating for at the corporate level. the benefits to stakeholders, the prospects for Support and Publicize Sustained Improve- sustainable programming seem bright. ment.  Highlighting key gains helps increase the perceived value of participation in BW programs, Knowledge Gaps and Suggestions especially in countries where participation is vol- untary. Moreover, by continuously working with for Future Research factories through advisory services, the program Due to the limitations of this project, we could not can help to ensure that the identified problem areas collect qualitative and quantitative data from all are effectively addressed. In this manner, workers BW countries. However, findings from this report will also gain a sense of trust in processes that not open up new avenues for research. Future studies only exposes but also helps remedy poor working on BW could include the following actions: conditions. Although certain issues are relatively 1. Explore differences of remittances from straightforward to address, new issues constantly male and female workers. Our field research arise. Therefore, it is crucial, that programs be pointed to the important role of remit- creative and flexible. Finally, by doing a better tances on workers’ welfare; however, this job of publicizing key instruments proven to be issue could be explored further. Data from effective, the program may be able to facilitate Cambodia show that although women spillover effects. This would happen by garnering tend to work longer hours and earn more, the interest of factory owners who may not be there is no difference between male and subscribed to the program, but may nonetheless female workers in terms of their poverty be interested in improving the job quality of their level. Moreover, women tend to own fewer employees and their bottom lines. assets. It appears that remittances could Ensure Program Sustainability.  The BW play a role in explaining this seemingly country programs are not yet self-sustaining; counterintuitive observation. That women rather, they all rely to some extent on external send more money back home while they donor support. This is problematic because endure longer hours in the factories can funding priorities change, and the program be traced to the socialization of girls to be could be forced to shut down. Several differ- care providers to younger siblings or older ent actions can be taken to avoid this scenario: parents (in the form of money, if the care (1) seek more financial support from buyers, is provided remotely). More research could who receive the benefits of risk insurance in be done to confirm this hypothesis, as well terms of knowing the working conditions in as to explore whether female workers have the factories they are sourcing from; (2) sup- used the communication skills they learned port key HR investments early on in light of from BW to negotiate a more gender-equal the finding that factories that have made such arrangement in providing care and financial investments tend to sustain compliance even in support to family members in rural areas. the face of external shocks (such as the end of 2. Understand the link between working the MFA or financial crisis); and (3) persuade conditions, wages, and firm performance. governments to assume greater ownership of If improvements in working conditions the program. If the broader economic benefits improve firm performance, then it would be of an ethical sourcing reputation are evident, easier to spread human resource management 98 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector (HRM) technology to other firms. A positive program. Qualitative research carried out link between working conditions and factory suggested that training in subjects such as performance would also have implications negotiation skills and worker-management for earnings, because better-performing cooperation has spillover effects, which has factories may be able to afford higher wages promoted greater gender equality within and attract better workers. More research workers’ households. On the other hand, is needed in this area to in order to better a survey in Kenya (a non-BW country) understand these relationships. showed that men insist on their traditional 3. Understand managers’ perspectives. Much roles at home and are not willing to share of this study has focused on workers’ per- household responsibility with their wives. spectives as they are important indicators Thus, more research is needed in order to of working conditions in factories. How- identify the causes of changes in gender roles ever, while workers’ views are a significant for men and women. More qualitative and consideration, it is also important to collect quantitative research could establish link- information on and analyze the perspec- ages between improvements in job quality tives of factory managers who make HRM for women, their gender roles, and develop- decisions. Understanding their views and, in ment impacts. This research could include many cases, resistance to improving work- a pilot program that will provide outreach ing conditions could be useful in designing to both men and women in garment factory strategies aimed at addressing managers’ worker households. concerns so that obstacles to improving factory-level working conditions can be References overcome. Ang, Debra, Drusilla Brown, Rajeev Dehejia, 4. Explore the gender dimensions of improving and Raymond Robertson. 2012. “Labor Law job quality and subsequent development Compliance and Human Resource Manage- impacts. Recent and previous quantitative ment Innovation: Better Factories Cambodia.” research establishes that job quality for Review of Development Economics 16 (4) the predominantly female workforce is (November): 594–607. improving due to interventions like the BW Appendix A: Data Analysis Outputs A.1 Cambodia, Jordan, and Vietnam Noncompliance Analysis Table A.1: Comparison Tables by Category and Sub-Category Ambient conditions Subcategory Country Water Temperature Toilets Air Light Cambodia 0.174 0.471 0.157 0.29 0.025 Jordan 0.25 0.222 0.375 0.042 0.042 Vietnam 0.021 0.132 0.123 0.082 0.041 Electrical safety Subcategory Country Exits Electrical Equipment Fire Cambodia 0.078 0.19 0.138 0.249 Jordan 0.477 0.306 0.312 0.222 Vietnam 0.256 0.23 0.344 0.13 Wage policies Subcategory Country Contracts Wages Overtime Cambodia 0.156 0.337 0.433 Jordan 0.215 0.172 0.083 Vietnam 0.248 0.116 0.19 Freedom of association and collective bargaining Subcategory Country FA Management CB Cambodia 0.069 0.013 0.000 Jordan 1 0.003 0.028 Vietnam 0.997 0.119 0.126 99 100 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table A.1.2: Noncompliance by Country and Category, in Percent Country Group Cambodia Jordan Vietnam Ambient conditions 20.8 18.6 7.4 Safety 15.2 33.5 26.6 Wage policies 28.5 15.1 16.5 FACB 3.1 24.2 28.2 Note: Noncompliance rates are the arithmetic average across all factories in all time periods within each country and category. All available years of data are included. FACB = freedom of association and collective bargaining. Figure A.1.3: Noncompliance over Time by Category and Country Ambiance Safety .1 .15 .2.25.3.35 0 .1 .2 .3 .4 2000 2005 2010 2015 2000 2005 2010 2015 visit year visit year Cambodia Jordan Cambodia Jordan Vietnam Vietnam Wage policies FACB 0 .1 .2 .3 .4 .1 .15 .2.25.3.35 2000 2005 2010 2015 2000 2005 2010 2015 visit year visit year Cambodia Jordan Cambodia Jordan Vietnam Vietnam Source: Authors’ calculation from factory-level compliance data. Appendix A: Data Analysis Outputs | 101 Table A.1.4: Regression Results Variables Estimate Log employment –0.020*** (0.000) Female share –0.020*** (0.002) Visit number –0.001*** (0.000) Ambient conditions 0.090*** (0.002) Safety 0.035*** (0.001) Wage policies 0.117*** (0.001) FACB –0.012*** (0.002) Time –0.001*** 0.000 Jordan 0.012*** (0.001) Vietnam 0.029*** (0.001) Constant 0.685*** (0.006) Observations 1,820,799 R-squared 0.016 Note: Standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. The dependent variable is noncompliance at the question level, so that negative coefficients suggest rising compliance. FACB = freedom of association and collective bargaining. 102 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table A.2: Probit Regressions of Job Satisfactory Status, 2015 Cambodia Apparel Worker Survey (1) (2) (3) Variables Model 1 Model 2 Model 3 Women 0.454*** 0.445*** 0.451*** (0.152) (0.152) (0.153) Age –0.0186* –0.0175 –0.0182* (0.0106) (0.0107) (0.0110) Married 0.199 0.201 0.198 (0.124) (0.124) (0.131) Education: completed class 9 or higher –0.0284 –0.0351 –0.0563 (0.143) (0.143) (0.145) Factory category B 0.418** 0.423** 0.476** (0.182) (0.182) (0.186) Factory category C 0.228 0.255* 0.322** (0.142) (0.144) (0.150) Factory size: medium 0.679*** 0.745*** 0.737*** (0.147) (0.152) (0.153) Factory size: small 0.458*** 0.606*** 0.525*** (0.156) (0.179) (0.186) Union member –0.370*** –0.355*** –0.365*** (0.135) (0.136) (0.137) Has fixed term contract –0.135 –0.126 –0.135 (0.137) (0.137) (0.138) Factory has H&S committee 1.044*** 1.024*** 0.975*** (0.313) (0.314) (0.318) Received OSH training? 0.183 0.182 0.193 (0.118) (0.119) (0.120) Heard of BFC –0.00377 –0.00694 0.00661 (0.130) (0.131) (0.134) Know PICC 0.165 0.176 0.158 (0.133) (0.133) (0.134) Hours worked per week 0.0124* 0.0119* (0.00718) (0.00719) Worker personally own: Washing machine 0.00468 (0.631) Motorcycle –0.0188 (0.137) Appendix A: Data Analysis Outputs | 103 (1) (2) (3) Variables Model 1 Model 2 Model 3 TV 0.0166 (0.123) Cellphone –0.131 (0.212) Bank account 0.422 (0.263) Constant –1.133** –1.920*** –1.748** (0.462) (0.650) (0.679) Observations 565 565 565 Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1 Note: Base group categories include factory category A and large factory. Table A.3: Earning Regressions of Workers, 2015 Cambodia Apparel Worker Survey (1) (2) Variables Earnings-level Earnings-log Hours worked last week 1.553*** 0.00844*** (0.233) (0.00122) Days worked last month 5.127*** 0.0348*** (0.669) (0.00349) Factory category B 20.50*** 0.102*** (5.982) (0.0313) Factory category C 18.68*** 0.0964*** (5.096) (0.0266) Women 2.320 0.00780 (5.432) (0.0284) Education: completed class 9 or higher 11.09** 0.0526** (4.996) (0.0261) Age 0.377 0.00220 (0.392) (0.00205) Married –2.943 –0.0220 (4.158) (0.0217) Tenure: years in the clothing industry 3.646** 0.0179** (1.576) (0.00824) Tenure squared –0.113 –0.000808 (0.104) (0.000541) (continues) 104 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table A.3: Continued (1) (2) Variables Earnings-level Earnings-log Received OSH training? 2.362 0.00793 (4.022) (0.0210) Heard of BFC? 7.647* 0.0313 (4.305) (0.0225) Union member –3.249 –0.00737 (4.492) (0.0235) Job in factory: Cutter –14.95 –0.0776 (10.22) (0.0534) Spreader 4.974 0.0113 (8.079) (0.0422) Checker –16.57* –0.106** (8.650) (0.0452) Packer –7.646 –0.0606 (7.811) (0.0408) Quality control 6.853 0.0218 (8.347) (0.0436) Supervisor 27.48** 0.0682 (11.27) (0.0589) Helper 14.97 0.0672 (18.76) (0.0980) Other job –16.90*** –0.114*** (5.551) (0.0290) Constant –53.56*** 3.766*** (20.19) (0.105) Observations 565 565 R–squared 0.322 0.382 Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1 Note: Base group categories include: Factory category A and Job in factory as a sewer. Appendix A: Data Analysis Outputs | 105 Table A.4: Full Model Specification of Children’s Education and Mother’s Work from Cambodia Pr[kid attends school] Coef. SE dy/dx SE Child’s age (linear) 1.560*** (0.124) 0.197 (0.018) Child’s age (quadratic) –0.071*** (0.006) –0.009 (0.001) Child is female –0.045 (0.083) –0.006 (0.011) Childworks –0.513*** (0.102) –0.065 (0.013) Child receives wage 4.111* (2.205) 0.520 (0.283) Child’s log wage –0.466** (0.187) –0.059 (0.024) Child’s father has primary education 0.009 (0.110) 0.001 (0.014) Child’s father has lower secondary education 0.266 (0.165) 0.034 (0.021) Child’s father has higher secondary education 1.159*** (0.453) 0.147 (0.055) Child’s father has higher university or more education 1.102** (0.478) 0.139 (0.061) Child’s mother has primary education 0.262*** (0.092) 0.033 (0.012) Child’s mother has lower secondary education 0.125 (0.212) 0.016 (0.027) Child’s mother has higher secondary education –0.340 (0.403) –0.043 (0.051) Child’s mother has higher university or more education 5.670*** (0.465) 0.717 (0.086) If the mother of the child is the only parent working –0.781 (0.780) –0.099 (0.097) If the father of the child is the only parent working –0.553 (0.413) –0.070 (0.052) If both parents work –0.657 (0.781) –0.083 (0.098) Child’s mother works in textile 0.321 (0.290) 0.041 (0.037) Child’s mother works in comparison sectors –0.644*** (0.201) –0.081 (0.026) Child’s mother works in textile * Child is female 0.239 (0.384) 0.030 (0.049) Source: Biprobit estimation results, CSES 2011: Child’s equation. Note: *Significant at the 10% level, ** significant at the 5% level, and *** significant at the 1% level. Pr[child attends school] Coef. SE dy/dx SE Child’s mother works in comparison sector * Child is female 0.048 (0.275) 0.006 (0.035) Child’s mother works as an employee -0.075 (0.257) -0.009 (0.032) Child’s mother has high wage 0.002 (0.199) 0.000 (0.025) Child’s mother’s log wage -0.003 (0.022) 0.000 (0.003) Child’s father has high wage -0.034 (0.157) -0.004 (0.020) Child’s father’s log wage 0.005 (0.009) 0.001 (0.001) Child lives in urban area 0.042 (0.129) 0.005 (0.016) Child lives in Banteay Mean Chey -0.252 (0.276) -0.032 (0.035) Child lives in Bat Dambang -0.310 (0.347) -0.039 (0.044) Child lives in Kampong Cham -0.172 (0.301) -0.022 (0.038) Child lives in Kampong Chhnang -0.645** (0.309) -0.082 (0.040) (continues) 106 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table A.4: Continued Pr[child attends school] Coef. SE dy/dx SE Child lives in Kampong Speu 0.001 (0.353) 0.000 (0.045) Child lives in Kampong Thum -0.352 (0.323) -0.044 (0.041) Child lives in Kampot -0.107 (0.321) -0.014 (0.041) Child lives in Kandal -0.142 (0.321) -0.018 (0.041) Child lives in Kaoh Kong 0.325 (0.628) 0.041 (0.079) Child lives in Kratie 0.034 (0.384) 0.004 (0.048) Child lives in Mondul Kiri 6.124*** (0.379) 0.775 (0.083) Child lives in Preah Vihear -1.016*** (0.341) -0.128 (0.045) Child lives in Prey Veaeng -0.314 (0.325) -0.040 (0.042) Child lives in Pousat -0.652* (0.362) -0.082 (0.047) Child lives in Rattanak Kiri -1.729*** (0.446) -0.219 (0.060) Child lives in Siem Reab -0.221 (0.300) -0.028 (0.038) Child lives in Krong Preah Sihanouk -0.313 (0.439) -0.040 (0.056) Child lives in Stueng Traeng -0.250 (0.462) -0.032 (0.059) Child lives in Svay Rieng -0.090 (0.355) -0.011 (0.045) Child lives in Takaev -0.113 (0.342) -0.014 (0.043) Child lives in Oudor Mean Chey 1.424*** (0.419) 0.180 (0.053) Child lives in Krong Kaeb -0.112 (0.612) -0.014 (0.077) Child lives in Krong Pailin -0.164 (0.404) -0.021 (0.051) Number of child’s siblings aged between 0 and 5 in the household -0.061 (0.090) -0.008 (0.011) Number of child’s siblings aged between 6 and 9 in the household -0.109 (0.085) -0.014 (0.011) Number of child’s siblings aged between 10 and 15 in the household -0.144* (0.082) -0.018 (0.011) Household wealth 0.129*** (0.039) 0.016 (0.005) Household is poor -0.189** (0.092) -0.024 (0.012) Constant -7.175*** (0.849) Number of observations 2,764 Source: Biprobit estimation results, CSES 2011: Child’s equation (continuation). Pr[mother works] Coef. SE dy/dx SE Mother’s age (linear) 0.091* (0.050) -0.001 (0.001) Mother’s age (quadratic) -0.001** (0.001) 0.000 (0.000) Mother has primary education 0.085 (0.091) -0.001 (0.001) Mother has lower secondary education 0.098 (0.166) -0.001 (0.002) Mother has higher secondary education 0.065 (0.212) 0.000 (0.002) Mother has higher university or more education 0.319 (0.392) -0.002 (0.005) Appendix A: Data Analysis Outputs | 107 Pr[mother works] Coef. SE dy/dx SE If the spouse works -0.101 (0.128) 0.001 (0.002) Mother lives in urban area -0.337*** (0.099) 0.002 (0.005) Mother lives in Banteay Mean Chey 0.455*** (0.172) -0.003 (0.006) Mother lives in Bat Dambang 1.155*** (0.220) -0.009 (0.015) Mother lives in Kampong Cham 0.838*** (0.156) -0.006 (0.011) Mother lives in Kampong Chhnang 0.390* (0.217) -0.003 (0.005) Mother lives in Kampong Speu 1.226*** (0.253) -0.009 (0.016) Mother lives in Kampong Thum 0.752*** (0.213) -0.006 (0.010) Mother lives in Kampot 0.679*** (0.251) -0.005 (0.009) Mother lives in Kandal 0.954*** (0.169) -0.007 (0.013) Mother lives in Kaoh Kong 6.540*** (0.298) -0.048 (0.086) Mother lives in Kratie 1.276*** (0.357) -0.009 (0.017) Mother lives in Mondul Kiri 0.328 (0.455) -0.002 (0.006) Mother lives in Preah Vihear 0.130 (0.275) -0.001 (0.002) Mother lives in Prey Veaeng 0.921*** (0.192) -0.007 (0.012) Mother lives in Pousat 0.680*** (0.240) -0.005 (0.009) Mother lives in Rattanak Kiri 1.333*** (0.354) -0.010 (0.017) Mother lives in Siem Reab 0.802*** (0.179) -0.006 (0.011) Mother lives in Krong Preah Sihanouk 1.100*** (0.361) -0.008 (0.015) Mother lives in Stueng Traeng 6.262*** (0.441) -0.046 (0.087) Mother lives in Svay Rieng 0.795*** (0.246) -0.006 (0.011) Mother lives in Takaev 1.474*** (0.273) -0.011 (0.020) Mother lives in Oudor Mean Chey 0.806** (0.329) -0.006 (0.011) Mother lives in Krong Kaeb 0.419 (0.540) -0.003 (0.007) Mother lives in Krong Pailin 0.345 (0.373) -0.003 (0.005) Household wealth 0.218*** (0.021) -0.002 (0.003) Number of children aged between 0 and 5 in the household -0.290*** (0.063) 0.002 (0.004) Number of children aged between 6 and 9 in the household 0.089 (0.072) -0.001 (0.001) Number of children aged between 10 and 15 in the household 0.021 (0.055) 0.000 (0.001) Constant -3.458*** (1.035) Number of observations 2,764 Source: Biprobit estimation results, CSES 2011: Mother’s equation. Note: *Significant at the 10% level, ** significant at the 5% level, and *** significant at the 1% level. 108 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table A.5: Cambodian Workers’ Perceptions on Compliance Issues, in Percent   Sex Category of services     Female Male A B C All Union member 32 21 45 6 36 30 Have been discouraged from joining unions* 18 17 17 44 17 18 Can talk to shop steward easily* 86 71 98 67 78 84 Paid minimum wage or above 94 82 97 78 97 92 Signed contract 90 82 93 76 92 88 Have fixed-term contract 71 70 79 48 79 71 Contract was explained 82 71 81 70 84 80 Reported factory has H and S committee 96 94 100 85 100 96 Reported factory has H and S policy 84 88 84 80 87 85 Received any OSH training 59 56 51 51 66 59 Work longer than 55 hours per week 81 70 82 72 80 78 Never been asked to do unwanted overtime** 67 65 63 66 69 67 Received leave when asked 93 96 92 93 95 94 Source: 2015 Cambodia Apparel Worker Survey. Note:* If union members; ** over the past 3 months; H and S=health and safety; Category of services from BW: A: receive only assessments, B: assessment and training, and C: assessment, training, and advisory. Appendix B: Organizations and Initiatives Working to Improve Working Conditions Business for Social Responsibility Ethical Trading Initiative (ETI) (BSR) HERproject The ETI is a leading alliance of companies, trade unions BSR is a global nonprofit organization that works and NGOs that promotes respect for workers’ rights with its network of more than 250-member companies around the globe. Its stated vision is a world where all to build a just and sustainable world. HERproject workers are free from exploitation and discrimination empowers women working in global supply chains and enjoy conditions of freedom, security, and equity. through workplace-based programs, capacity building of local civil society, and advocacy with business and Fair Labor Association (FLA) government. It is a global public-private partnership to empower low-income women working in global supply The FLA works to protect the rights of workers in a chains through workplace programs promoting health wide range of supply chains. Members of the FLA are and financial inclusion. Launched in 2007, HERproject held to its code of conduct, and the FLA conducts its is active in 13 countries with more than 40 international own external assessments. By uniting universities, civil companies, 300 factories and farms, and 20 civil society society organizations, and companies, the FLA hopes partners reaching more than 250,000 women. that key labor issues can be addressed and goods can be produced in a more ethical manner. Clean Clothes Campaign (CCC) Fair Trade The CCC works to expand and establish basic labor rights for workers in the global garment and sports- Fair Trade is a third-party organization that oversees wear industries. The CCC was founded in 1989 and is transactions between U.S. companies and international now allied with 16 different European countries and suppliers. Farmers and workers producing Fair Trade more than 200 organizations and unions. The CCC Certified goods are paid living wages, work in a safe believes in basic, yet inarguably important, principles environment, and receive the proper funds to empower regarding labor rights: the establishment of minimum their communities. Fair Trade also aims to spread standards, safety in the workplace, and transparency awareness among consumers and works to bring more from corporations, among others. These principles manufacturers into its system. have set a new standard for labor rights in Europe. Fair Wear Foundation (FWF) Electronic Industry Citizenship The FWF is an independent, nonprofit organization that Coalition (EICC) works with companies and factories to improve labor conditions for garment workers. FWF’s 80-member The EICC was founded in 2004 by a group of leading companies represent over 120 brands and are based in electronic companies that were interested in promoting seven European countries. Member products are sold the well-being of workers and communities involved in over 20,000 retail outlets in more than 80 countries in the global electronics supply chain. Members of the around the world. FWF is active in 15 production EICC are not only held to core social, environmental, and countries in Asia, Europe, and Africa. FWF keeps track economic standards, but also are encouraged to engage of the improvements made by the companies it works with governments and institutions to hone expertise and with. And through sharing expertise, social dialogue, expand perspective. Today, 100 companies are members and strengthening industrial relations, FWF increases of the EICC, which directly employs 5.5 million people the effectiveness of the efforts made by companies. and has an annual revenue of $2.6 trillion. 109 110 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Global Social Compliance Programme address the most pressing social issues of our time: from HIV/AIDS and human rights to promoting long-term (GSCP) assets among low-income people and improving the The GSCP was founded in 2006 to provide consistent lives of apparel workers. compliance codes across supply chains and address the root issues surrounding noncompliance. The GSCP works to identify and reconcile discrepancies between Love Fashion Hate Sweatshops current codes and move toward a more unified standard. (War on Want) The GSCP is currently composed of 39 companies The Love Fashion Hate Sweatshops campaign was and actively engages civil society stakeholders in its started by War on Want, an organization committed programs. to the fight against global poverty, inequality, and injustice. The Love Fashion Hate Sweatshops campaign Good Electronics is concerned with the implications of a globalized gar- ment industry and the ways in which workers’ rights Good Electronics works to preserve and protect labor are influenced by the 21st century clothing market. rights in the electronics supply chain. The Common Main goals of the campaign include the establishment Demands on the Electronics Industry, formulated by of legally binding regulations that will solidify basic the Good Electronics network, addresses human rights rights for laborers, greater transparency of corpora- issues not only within production plants but also tions, and heightened awareness among consumers. throughout the production cycle. Sustainable Apparel Coalition (SAC) International Labour Organization (ILO) The SAC is a trade organization composed of brands, The IILO, founded in 1919, is committed to the retailers, manufacturers, government, and nongovern- promotion of social justice and labor rights. Main mental organizations and academic experts, representing goals of the ILO include promoting rights at work, more than a third of the global apparel and footwear encouraging employment opportunities, enhanc- market. The coalition is working to reduce the envi- ing social protection, and establishing dialogue on ronmental and social impacts of apparel and footwear work-related issues. The ILO has 185 member states products around the world. SAC’s focus is The Higg and works to alleviate a wide array of labor-related Index, a suite of assessment tools that standardizes the human rights violations. measurement of the environmental and social impacts of apparel and footwear products across the product Labour Behind the Label life cycle and throughout the value chain. The Labour Behind the Label campaign is part of a larger campaign network throughout Europe that SweatFree Communities strives to enhance workers’ rights worldwide. Labour SweatFree Communities is a campaign of the Inter- Behind the Label engages with trade unions and their national Labor Rights Forum. The campaign aims local branches, consumer organizations, campaign to assist, empower, and support sweatshop workers groups, and charities to bring about meaningful and in their struggle to improve working conditions and positive change in the garment industry. The campaign form and join unions. The first SweatFree Communi- hopes to raise awareness within the general public, ties were started in Maine, Minnesota, New York, pressure companies to assume more responsibility for Washington, and Wisconsin to ensure that tax dollars their workers’ rights, support and empower workers in were not being spent on clothing and uniforms made their fight for more humane working conditions, and in sweatshops. Today, numerous cities, counties, and lobby governments and policy makers to legislate for school districts have adopted “sweatfree” policies, workers. Labour Behind the Label is the UK platform outlined by SweatFree Communities. of the Clean Clothes Campaign. The Institute for Global Labour and Levi Strauss Foundation Human Rights (formally National Labor The Levi Strauss Foundation advances the human rights and well-being of underserved people touched by its Committee) business. The foundation supports progressive leaders The Institute for Global Labour and Human Rights and organizations that take risks and innovate as they (the Institute) is a nonprofit human rights organization Appendix B: Organizations and Initiatives Working to Improve Working Conditions | 111 dedicated to the promotion and defense of internation- Worker Rights Consortium (WRC) ally recognized worker rights in the global economy. Founded in 1981 as the National Labor Committee, The WRC is concerned with the production and con- the Institute’s research, in-depth reports, high-profile sumption of college and university-related apparel. A public campaigns, and widespread media coverage great deal of this apparel is produced by large companies have been instrumental in creating the anti-sweatshop with intricate global supply chains, and universities movement in the United States and internationally. The have little say in the code of conduct adopted by these Institute is headquartered in Pittsburgh with regional companies. The FLA, which has over 175 college and offices in Dhaka and San Salvador and research/ university affiliates, works to make the production of advocacy partnerships in China, Jordan, Central this clothing more ethical and humane. America, and South Asia. Worldwide Responsible Accredited United Nations (UN) Production (WRAP) The UN was founded in 1945 following World War II WRAP works to make the production of goods in the with the aim of promoting world peace, protecting sewn products sector safe, humane, and sustainable. and expanding human rights, and encouraging social WRAP-certified facilities receive a gold, silver, or and economic development. Today, 193 nation-states platinum rating based on compliance to standards. sit are members of its general assembly. The UN is WRAP has 1,725 certified factories, which employ actively involved in research within the realm of global over 1.5 million people. trade and is a credible body concerning both labor and human rights. Appendix C: Methodology for Conducting Qualitative and Quantitative Data Gathering Our team conducted original field research in four To better understand the difference between levels countries: Cambodia, Kenya, Lesotho, and Vietnam. of service offered by BFC, our team the sample by level Below is a table summarizing the scope and reach of of service as follows: our research in each country. • Category A—Monitoring services only • Category B—Training services offered in addi- 1. Cambodia tion to monitoring The data collected from Cambodia came from 4 focus • Category C—Advisory and training services group discussions (FGD) involving 26 workers, as well offered in addition to monitoring as questionnaires completed by 565 workers. The World Bank commissioned the Nuppun Institute To ensure that a sufficient number of members of for Economic Research to conduct a survey with gar- Performance Improvement Consultative Committees ment workers to seek their views on the Better Factories (PICC) answered the questionnaire and were part of Program (BFC) in Cambodia. The survey interviewed the FGDs, we over-sampled factories in category C, 565 workers in 12 different factories in Phnom Penh given that it the PICCs are typically established as part and its surrounding areas. Four factories were deemed of the advisory services package offered by BFC. The small (less than 500 workers), four were medium size table below details our sampling framework. (500 to 1,000 workers), and four were large (more Following the selection of factories from a list than 1,000 workers). We also tried to get a spread of provided by Better Factories program, our research factories in terms of the country of ownership. The team mapped the exact locations and addresses of the final sample of factories were owned by firms from factories through phone calls. This is an important Australia, Cambodia, China, the Republic of Korea, process to determine the exact location before the Singapore, Sweden, and the United States. team goes to conduct the interview. Table C.1: Overview of Original Field Research Conducted by Our Research Team Survey Focus Group Discussions Number Number Number of workers Country Date of research administered held participating Cambodia March 2015 565 4 24 Kenya July 2013 n/a 13 131 Lesotho May–Dec. 2011; Sept. 2013 377 37 290 Vietnam March 2015 n/a 4 32 Table C.2: Sampling Frame for Primary Sampling Unit (factory) BFC services offered/factory size Small = X<500 Medium = 5001000 Monitoring (A) 1 1 1 Training and monitoring (B) 1 1 1 Training, advisory, and monitoring (C) 2 2 2 113 114 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector The field survey was conducted from March 5 to C large factories; with six male workers from two March 12, 2015. The field survey team was organized different category A small factories; with eight female into three teams. Each team has five members—one workers from two different category A small facto- field team leader and four data collectors—and each ries; and with four female and two male supervisors team is responsible for interviewing workers in four from two different medium-size factories (two from factories. The team leader interviewed one worker and category A and four from category C factories. The used the rest of his or her time to check and verify the questions for the FGD were adapted from the Leso- completed questionnaires from the team members. The tho FGD template. The FGDs were held at various other team members were responsible for interviewing locations including a restaurant, office building, and up to five respondents. The interviewers were assigned in a coffee shop. different locations in front of the factory gate to ensure that he or she could follow one worker and asked for permission for the interview. After having permission 2. Kenya from the interviewee, the interview could take place The data collected from Kenya came from 13 focus at restaurants, nearby factories, or at interviewees’ group discussions involving 131 workers. rooms or homes. In July 2013, 13 focus groups were held with 141 The Cambodia survey questions were adapted from workers from 17 factories in the Athi River Export the model used in Lesotho. Using CSES (Cambodia Processing Zone (EPZ). A union organizer from the Socio-Economic Survey) data from 2012 and taking into Tailors and Textile Workers Union (TTWU) recruited consideration general knowledge about the particular participants, with the assistance of two shop stewards contextual factors, questions were removed or added. from the union. Ten of the focus groups were held The final questionnaire consists of approximately with females, two with males, and one with a mixed 65 items related to working conditions and work/gender gender group. The focus group guidelines consisted dynamics at work and at home. The main purpose of of four modules: Module 1 dealt with working condi- the questionnaire is to cover a wide range of issues tions and labor standards compliance; Module 2 with and, therefore, focus on breadth. available remedies and tools for addressing issues; The data from quantitative survey were analyzed Module 3 with employment relations; and Module 4 using Stata, a statistical software. with gender relations. The focus groups lasted approximately 1 to 1.5 hours Focus Group Discussions and were both digitally and video recorded. Most par- ticipants spoke in English and, for those who needed The researchers held four FGDs on March 7 and 8: assistance, the junior consultant translated. with six female workers from two different category Table C.3: Focus Group Guidelines for Discussion Module 1: • What is good and what is bad about work? Working conditions and labor • Similar issues for women and men? standards compliance • Do employers comply and who monitors them? • What needs to change in order to have job quality? • Do improvements in job quality lead to improvements in welfare? Module 2: • If you have an issue, what do you do about it? Available remedies/tools for • What, if any, grievance procedures are in place? addressing issues • Are available remedies effective at improving job quality? Module 3: • Relations between workers and supervisors. Employment relations • Same for women and men? • Structures in place for promotions, employee involvement, etc. • Barriers to equal opportunity for advancement/agency. Module 4: • Norms surrounding female and male roles at work and at home. Gender relations • Equal access to economic opportunities for women and men. • Breadwinners and decision makers; impact of work on home life. • Women’s participation in unions and collective actions. Appendix C: Methodology for Conducting Qualitative and Quantitative Data Gathering  | 115 3. Lesotho focus on breadth. The broad range of feedback will also generate some patterns in terms of predominant The data collected from Lesotho came from 37 focus issues and what, if any, shifts there have been in work- group discussions involving 290 workers, as well as ers’ feedback from the baseline questionnaire in 2011. questionnaires completed by 377 workers. The 2013 questionnaire was modified only slightly to maximize comparability with the earlier data collec- Workers’ Questionnaire tion in Lesotho. With the exception of a few additional In preparing the 2011 questionnaire to administer to questions, it is very similar to the questionnaire used workers, we drew on the literature on labor standards in Lesotho in 2011. in the global apparel industry. In the initial stages The questionnaires were analyzed using SPSS predic- of drafting the questionnaire, we relied on previous tive analytics software (2011) and STATA statistical literature, news articles, and stakeholder interviews software (2013). For this study, statistics were pulled for information about issues for workers in the together into tables to facilitate comparison between clothing industry. The questionnaire included items workers’ feedback in 2011 and 2013. The results are related to the workers’ previous work experience, further broken down according to gender and Better wages, hours, conditions of work, health and safety, Work status. dispute resolution, buyers and audits, and relation- ship with managers. Focus Group Discussions To administer the questionnaire, one session was In 2011 union organizers recruited participants for held with roughly 60 workers at a hostel auditorium focus group discussions (FGD), which was somewhat in Maseru in May 2011, and a second session was held a limitation of the study in that there was no nonunion with another roughly 60 workers in the training center representation in the focus groups. In 2013 participants in Maputsoe in December 2011. Union organizers for the focus groups were recruited in two ways: union were responsible for recruiting the participants. With members were recruited by their union organizers, and everyone seated at a desk or table, my translator and nonunion members were recruited by Better Work I worked through the questionnaire with everyone, Enterprise Advisors, who had nonunion contacts with each person completing one question at a time through the Performance Improvement Consultative altogether. Approximately 120 questionnaires were Committees (PICCs) in different factories. fully completed. In Maseru, it was easiest to meet with one focus The 2011 questionnaire was slightly revised for group per day, after work from 5:30 to 7:30 pm. Mas- the 2013 data collection to include questions dealing eru is the capital of Lesotho and also the busiest city, with (1) the impact of Better Work (BW) over time, with many villages surrounding the city center. Two and (2) job quality. The recruitment method was also industrial centers, Ha Thetsane and Maseru West (also revised, realizing that a broader audience could be known as Station), are located relatively close to town, reached by training shop stewards on how to facilitate where the Better Work Lesotho office is, and where all the questionnaire and then sending them out to the of the focus groups took place. industrial areas, union meetings, and villages to get In Maputsoe all of the focus groups took place on workers to complete it. In 2013 we trained several Sundays from 9:00 to 11:00 a.m., 12:00 to 2:00 p.m., shop stewards on how to facilitate the questionnaire, and 3:00 to 5:00 p.m. Maputsoe is 80km north of making sure they understood each and every question, Maseru and is also a relatively large city, though not as and that they would be able to answer any questions big as Maseru, and more spread out. It is also known to that workers might pose to them. These shop stewards be more dangerous than Maseru. Workers in Maputsoe then hand-delivered the questionnaires to workers, both are reluctant to stay later than 6:30 or 7:00 p.m., as at the industrial areas and in their villages. This method they want to be able to walk home before dark. It also gave them more time and flexibility to distribute and took them longer to get to the meetings, which could collect a larger number of questionnaires. Ultimately, then begin only by around 6:00 p.m. This situation is approximately 250 fully completed questionnaires what motivated the decision to hold multiple focus were collected. groups on Sundays, when no one had to work and The workers’ questionnaire itself consists of approxi- all meetings could be held before nightfall. All meet- mately 115 items related to working conditions and ings took place in the Lesotho National Development work/gender dynamics at work and at home. In addi- Corporation (LNDC) building. tion to simple yes/no questions, there are also many In 2011, the year that the baseline data were col- opportunities to leave a comment or to elaborate lected, 17 FGDs were conducted with 149 workers further. However, the main purpose of the question- (approximately 8 or 9 workers per group). Almost all naire is to cover a wide range of issues and, therefore, 116 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector of the groups had both male and female participants. created in 2011 according to the Better Work (BW) The discussions focused on understanding their percep- compliance clusters. New folders were created to tions of labor standards compliance in their factories, capture themes that came up in addition to the Better as well as their personal health and well-being. Work compliance clusters. If the personal attributes In each focus group, demographic information about have also been coded, it then becomes possible to query workers was gathered by making a note of their gender the data according to different attributes. The results and asking them to state (a) which factory they work might indicate, for example, that females spoke more at; (b) how many years/months they have worked there; frequently about problems with health and safety than (c) what their specific job is; (d) the factory owner’s did the males, or that workers at a particular factory nationality; (e) the country they supply to; (f) whether spoke more about health and safety problems than they participate in Better Work; and (g) whether they did workers at any other factory. The frequency is are a shop steward or; (h) a supervisor. determined by the number of times a particular issue In 2013, 20 FDGs were conducted with 141 workers is mentioned in a focus group discussion. (approximately 7 workers per group): 10 in Maseru In 2013 new folders were created to capture and 10 in Maputsoe. All groups except one (due to “improvements since BWL” as well as “persistent a communication error) met separately according to problems” and “other issues.” Workers’ feedback was gender, including 14 female groups, 5 male groups, coded broadly in these categories and, more specifically, and 1 mixed group. Within those groups, it is pos- according to the BW compliance clusters. This made it sible that some will be working at factories that have possible to analyze patterns of improvement within the subscribed to Better Work and others may be work- (comparable) context of the BW compliance clusters ing at factories that have not. As with the 2011 focus used in 2011 as well. groups, demographic information was collected to be able to look for differences between workers by fac- tory, gender, tenure, etc. 4. Vietnam Workers were asked to discuss what they like and The World Bank commissioned the Life Center for do not like about their jobs and what needs to happen Promotion of Quality of Life to conduct FGDs with to improve them. This question served as an icebreaker garment workers. Four FGDs were held on March 15 and generally helped to provide a springboard for the at a factory in Ho Chi Minh City. Each FGD had eight discussion. Topics included working conditions—what participants and was facilitated by two members of are the standards, the practices, and do their employers the Life Center team. The discussions were all held in comply—as well as the relationships and dynamics a garment factory subscribing to Better Work (BW) around those issues. services, and they took between 1.5 and 2 hours to The focus group transcripts were analyzed using complete. They were conducted in Vietnamese, but a qualitative software known as NVivo.1 NVivo allows member of our team was also present to deal with any researchers to code the personal attributes of the questions that may arise. participants involved in the research and tie it to each This sampling framework enables us to better of the statements they have made in an interview. It understand any possible differences between men also allows researchers to then sort the data from the and women, between BW and non-BW, and between transcripts by themes. To do this, the researcher cre- workers and supervisors. For the most part, the ques- ates folders, highlights the sections of the transcripts tions used across the FGDs were the same, although that apply, and drags/drops these highlighted sections we did administer specific question relating to BW into the appropriate folders. In this study, folders were instruments only to BW workers. We also tried to get at similar issues and instruments in discussion with non-BW affiliated factory workers). In addition to all the same guiding questions in the three other FGDs, 1 Although it makes no noticeable difference in the results, it is worth noting the supervisors received one question about the process that version 9 of NVivo was used for the 2011 data, whereas version 10 was used for the 2013 data. by which they were promoted. Table C.4: Composition of Participants in Focus Group Discussions Criteria for participants in the FGDs BWV factories Participants YES NO PICC members Working experience Sex Assessment Assessment and advisory 5 years in garment/ Focus group services services for YES NO textile industry and discussion Number of only for at at least 2 (for at least at least 3 years in (FGD) participants least 2 years years a year) current factory Male Female FGD 1— 4 2 2 4 4 BWV fty 8 female workers 4 2 2 4 4 FGD 2— 4 4 4 4 Non-BWV 8 fty female workers 4 4 4 4 4 2 2 4 4 FGD 3— 8 Male workers 4 2 2 4 4 4 2 2 4 2 2 FGD 4— 8 Supervisors 4 2 2 4 2 2 Note: fty means factory Appendix C: Methodology for Conducting Qualitative and Quantitative Data Gathering  | 117 Appendix D: List of Job Quality Characteristics Table D.1: Economic and Social Indicators of “Job Quality” According to Workers in Kenya Economic Social Wages Fairness  • Increased salary  • Good relationship with managers  • Paid on time  • No tribalism or racial discrimination  • Bonuses offered  • Qualified HR who can resolve problems Hours  • Transparency between workers and management Reasonable hours (maximum 45 hours normal  •  working time)  • Same salary for all operators/all workers to be treated equally (including rest breaks for Achievable targets (don’t raise targets when  •  everyone) wage doesn’t increase accordingly) Recognize work–life balance/needs Job security Crèche (day care/baby care) available at work.  •  Move from casual to permanent status after  •  Mothers get 2 hours to breastfeed and mingle 3 months with children on work site Health and safety Managers should be understanding if workers  •  Protective gear/masks/safeguards  •  have domestic problems/permission to leave if Company nurse/health clinic  •  problem at home/permission to tend to urgent matters Benefits Physical health and comforts Paid leave  •  Cool, clean, and airy environment  •  Transport stipend  •  Provide milk  •  Increased house allowance  •  Provide lunch at work and food for night  •  workers Tea break (10 minutes rest)  •  Recreation facilities  •  Emotional well–being and personal freedoms Feel appreciated  •  Freedom of speech/expression  •  Allowed to join union freely  •  119 120 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table D.2: Economic and Social Indicators of “Job Quality” According to Workers in Lesotho Economic Social Wages Fairness Living wage  •   • Good employment relations Bonuses  •   • No discrimination  •  Loans/scholarships  • Freedom of speech Hours  • All workers in same job category get same pay  •  Reasonable hours  • Don’t cut salary without consent Reasonable targets  •   • No double punishment for mistakes  • Free movement/go to toilet when needed Job security Contracts/permanent status  •  Physical health and comforts Health services  •  Clean toilets and workplace  •  Factory doctor/clinic Milk for those working with chemicals2  •   •  Regular check–ups Tea time/hot water to drink  •  Heaters or ‘freezer suits’  •  Benefits Be allowed to have extramural activities  •  Longer (paid) maternity leave  •   •  Accident compensation Emotional well–being  •  Life insurance Feel appreciated (bonuses, gifts, holiday  •  party) Be relaxed and happy/love and peace  •  Table D.3: Economic and Social Indicators of “Job Quality” According to Workers in Vietnam Economic Social Wages Fairness High salary  •   • Good treatment by supervisors and  •  Paid on time management (management listen to workers’ opinions, shop stewards/supervisors care for Bonuses offered  •  workers’ well-being, and management does Hours not have condescending attitude/behaviors  •  Reasonable hours (not too much overtime) toward workers)  • Opportunity for professional development and Job security promotion Stable income  •  Physical health and comforts Health and safety Cool and airy environment  •  Safe working environment (free of accidents)  •  Better meals  •  Basic health needs ensured  •  Clean environment  •  Benefits Factory to organize sports and social events  •   • Above or according to Labor law Emotional well-being Feel appreciated (especially by management)  •  Be relaxed without stress  •  Good relations with co-workers  •  2 As pointed out by a representative from the Ministry of Labor, it is a myth that milk will help those working with chemicals. The government has been working to try to discourage workers from believing in this. A representative from BWL also remarked that they do trainings on chemical management and that they are emphasizing that providing milk will not help them in any way. Appendix E: Baseline Synthesis Report Profiles Table E.1: Baseline Synthesis Report Profiles No. of factories assessed in 1st % of women Country synthesis report No. of workers workers Period covered Haiti 21 22,172 62.0 Oct 2009–Dec 2009 Indonesia 20 40,562 88.0 Jul 2011–Mar 2012 Jordan 15 13,338 56.0 Mar 2009–Feb 2010 Lesotho 10 18,971 82.5 Mar 2011–Jan 2012 Nicaragua 20 32,598 53.1 Feb 2012–Mar 2013 Vietnam 32 61,388 84.0 Dec 2009–Jun 2010 Total 118 189,029 74.8 Note: Authors’ calculation based on first synthesis reports. 121 Appendix F: Application of SWIFT’s Survey-to-Survey Imputation Method to the Better Work Program in Cambodia The basic idea behind the Survey of Well-being via The sample size of CSES 2012 is 3,835 households, of Instant and Frequent Tracking (SWIFT)’s survey-to- which 777 are in Phnom Penh, 699 are in other urban survey imputation is to estimate consumption and areas, and 2,359 are in rural areas.3 poverty based on a prediction model rather than measuring consumption expenditures directly. SWIFT’s modeling approach adopts the multiple-imputation Model Selection (MI) paradigm originally presented by Rubin (1987) Candidate Variables and addresses the shortcoming of single-imputation To find the best consumption prediction model, a set inference that overstates the precision of an estimate. of candidate variables from the CSES 2012 survey were selected and put into the model selection regres- Analytical Process sion that estimates the log of per capita household consumption levels. There were about 60 candidate The survey-to-survey imputation comprises two major variables prepared in total.4 The candidate variables steps—model selection and consumption imputation— were either continuous or dummy/indicator variables, each with several substeps. First, the model selection and included location variables, demographic charac- step entails the estimation of consumption models teristics, education and employment variables, housing from consumption expenditure survey data by means characteristics, and asset ownership variables. Any of of regression analysis. This step builds the best con- the following candidate variables were subsequently sumption prediction model by identifying a set of dropped: variables that had too many missing values; explanatory variables that are significantly correlated variables whose construction required information with household consumption expenditures. from complex questions; and variables that showed Second, the consumption imputation involves feeding no or very small variation in the garment workers data on consumption correlates from a nonconsump- survey data. tion survey into the consumption model. The SWIFT’s For model selection, the forward stepwise selec- MI approach generates multiple rounds of simulated tion method was employed with a significance level household consumption expenditures. To get a single for entering the model of 0.05 and for staying at the inference based on multiple imputations, the mean of a model of 0.05. This selection method starts from an statistic, such as poverty rate, from each round is then “empty” regression model. That is, if the most sig- averaged out across all the imputations (while taking nificant excluded variable is statistically significant at into account both variability between imputations and the prespecified 0.05 level for entering, the selection variability within each imputation). method adds the variable and re-estimates the model. Meanwhile, if the least significant included variable Consumption Data for Model becomes insignificant at the prespecified 0.05 level for staying, the method removes it and re-estimates Estimation the model. The selection repeats this process until Consumption expenditure data in Cambodia were neither is possible so that every variable in the regres- compiled through the Cambodia Socio-Economic Sur- sion model is significant at the level for staying and vey (CSES) 2012 conducted in 2012/13. The CSES is a every variable outside the model is insignificant at the comprehensive, annual face-to-face survey conducted level for entering. by the National Institute of Statistics of the Ministry of Planning. The survey consists of multiple modules, such as demographic characteristics, housing, agri- 3 Of 777 households in Phnom Penh in the CSES 2012 data, 40 come from in culture, education, labor force, health and nutrition, 4 rural areas. For a complete list of candidate variables, see the KH_ModelProjections_ victimization, and household income and consumption. CSES2012_GarmentRVSD_ 150331xlsx file. 123 124 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table F.1: Model for Urban Phnom Penh Households with at Least One Textile Worker Dependent variable: Log of per capita household consumption Variable description Coefficient Std. Err. t |Prob|>t Own asset: car (1/0) 0.48809 0.18115 2.69 0.01 Own asset: motorcycle (1/0) 0.19667 0.04570 4.30 0.00 Own asset: television (1/0) 0.24672 0.09835 2.51 0.01 Own asset: washing machine (1/0) 0.42655 0.05659 7.54 0.00 Floor: earth, clay –0.11375 0.05079 –2.24 0.03 Household size –0.08253 0.00791 –10.43 0.00 Lighting: publicly provided electricity 0.11272 0.04545 2.48 0.01 Ratio of children below 15 in household –0.30950 0.10230 –3.03 0.00 Wall: concrete, brick, stone 0.17080 0.04382 3.90 0.00 Constant 9.17196 0.08372 109.55 0.00 Adj. R–squared: 0.5860 Source: CSES 2012 data. Robustness of the Model from a small number of households with very high consumption per capita. Even after dropping the car Because the sample size in the CSES 2012 data is quite ownership variable, the coefficients of other variables limited for urban Phnom Penh households with at least were quite stable. one textile worker, it was decided to compare the model Second, a test for overfitting was undertaken because with two different models and compare their projection the performance of the selected model outside the performances subsequently.5 Those three models are: sample may be vulnerable to overfitting problems, (1) urban Phnom Penh households with at least one when the sample size used for developing the model is textile worker; (2) urban households with at least one textile worker; and (3) urban households. For the third model, the strategy was to develop the consumption model using all urban households but apply the selected Table F.2: Sample Size and Observed model only to urban Phnom Penh households with at Poverty Rate least one textile worker. The performances of the three models were then tested by comparing the predicted Observed and observed poverty rates, as discussed below. Sample poverty To further test the robustness of the urban Phnom Model size (N) rate Penh model, two additional checks were also conducted. First, to test the stability of the model, the car owner- Urban Phnom Penh 157 8.3 households with at least ship variable was dropped out of the model, and the one textile worker coefficients of the remaining variables were compared with those in the original model. This was done because Urban households with 204 8.5 there had been a concern that the car ownership variable at least one textile worker may have picked up a disproportionately large effect Urban households model 1436/157 8.5 applied to: Urban households with 5 Textile worker is defined as those who work in the Textiles and Apparel at least one textile Industry (Q15/C06b, >1200 & <1500) as an employee (Q15/C08, =1) and worker aged between 15 and 64. For details, also see the KH_ DescTextileWorkers Draft1Revised_150213.docx and KH_DescTextileWorkersDraft2Revised_ 150213. docx files. Source: CSES 2012 data. Appendix F: Application of SWIFT’s Survey-to-Survey Imputation Method | 125 Table F.3: Model for Urban Phnom Penh Households with at Least One Textile Worker, Including and Excluding the Car Ownership Variable Dependent variable: Log of per capita household consumption Own asset: car included Own asset: car excluded Variable description Coefficient Std. Err. t |Prob|>t Coefficient Std. Err. t |Prob|>t Own asset: car 0.48809 0.18115 2.69 0.01 Dropped (1/0) Own asset: 0.19667 0.04570 4.30 0.00 0.20735 0.04575 4.53 0.00 motorcycle (1/0) Own asset: 0.24672 0.09835 2.51 0.01 0.25770 0.10044 2.57 0.01 television (1/0) Own asset: 0.42655 0.05659 7.54 0.00 0.48008 0.07614 6.31 0.00 washing machine (1/0) Floor: earth, –0.11375 0.05079 –2.24 0.03 –0.11750 0.05515 –2.13 0.04 clay Household size –0.08253 0.00791 –10.43 0.00 –0.08107 0.00774 –10.47 0.00 Lighting: 0.11272 0.04545 2.48 0.01 0.10936 0.04781 2.29 0.02 publicly provided electricity Ratio of –0.30950 0.10230 –3.03 0.00 –0.28915 0.11216 –2.58 0.01 children below 15 in household Wall: concrete, 0.17080 0.04382 3.90 0.00 0.18814 0.04915 3.83 0.00 brick, stone Constant 9.17196 0.08372 109.55 0.00 9.14938 0.08934 102.41 0.00 Adj. R– 0.5860 0.5407 squared: Source: CSES 2012 data. very small. The results of 10-fold cross-validation sug- converted into missing). For the urban Phnom Penh gested, however, that the exactly same set of variables household with textile workers model, the difference would have been chosen when had the model with the between the predicted and observed rates is about one smallest root mean square error (RMSE) been selected.6 percentage point. This result demonstrates that the urban Phnom Penh model is free from overfitting issues as well. Model Performance Table F.4: Predicted and Observed 2012/13 Poverty Rates To test their poverty prediction performances, the estimated model parameters were first applied back Model Predicted Observed to the CSES 2012 data (with consumption data Urban Phnom Penh 9.5 8.3 households with at least one textile worker 6 The selected model was checked for the potential problem of over- or under-fitting by applying the k-fold cross-validation method. See by way of comparison, Garth et al. 2013. Source: CSES 2012 data. 126 | Interwoven: How the Better Work Program Improves Job and Life Quality in the Apparel Sector Table F.5: Predicted 2015 Poverty Rates model show unusual patterns.7 While the percentage of asset ownership is consistently lower in the garment Predicted Observed worker survey than in 2012 CSES for all items, housing Model (2015) (2012/13) characteristics such as floor materials, wall materials, and lighting sources all indicate improvement. Fur- Urban Phnom Penh 4.8 8.3 thermore, the household size and the children ratio are households with at least one textile worker substantially lower in the garment worker survey than in 2012 CSES. All these results would rather suggest Source: CSES 2012 data and garment workers survey 2015. that the garment workers data were collected using a sample frame different from the CSES 2012 surveys. In any case, it must be careful when making any Next, to predict the poverty incidence of the generalization beyond the given sample, as the garment households to which the garment workers surveyed- workers survey is not based upon a probability-based respondents belong, the estimated urban Phnom Penh sampling. model parameters were applied to the garment workers data. The predicted poverty rate becomes 4.8 percent References for the sample of the garment workers survey data. CSES (Cambodia Socio-Economic Survey). 2012. Phnom Penh: National Institute of Statistics—Ministry of Caveat Planning. A key assumption that must hold is that the typical James, Gareth, Daniela Witten, Trevor Hastie, and Rob- household consumption behavior identified by the ert Tibshirani. 2013. An Introduction to Statistical selected model has not changed substantially between Learning, with Application in R. New York: Springer. the CSES 2012 survey and the garment workers 2015 Rubin, Donald B. 1987. Multiple Imputation for survey. One potential issue is that the concept of Nonresponse in Surveys. New York: John Wiley. household in the garment workers survey is not the same as that in the CSES survey, as the CSES 2012 data indicate that no room-sharing workers are counted as a household. In fact, the summary statistics of the selected 7 Mean is a household-weighted mean. Table F.6: Summary Statistics for the Model for Urban Phnom Penh Households with at Least One Textile Worker CSES 2012 (2012/13) Garment workers (2015) Label Obs Mean Min Max Obs Mean Min Max Own asset: car (1/0) 157 0.02663 0 1 565 0.01239 0 1 Own asset: motorcycle (1/0) 157 0.87449 0 1 565 0.36637 0 1 Own asset: television (1/0) 157 0.94645 0 1 565 0.45310 0 1 Own asset: washing machine (1/0) 157 0.03558 0 1 565 0.01239 0 1 Floor: earth, clay 157 0.02155 0 1 565 0.00531 0 1 Household size 157 4.85086 1 14 565 3.38407 1 10 Lighting: publicly provided electricity 157 0.98230 0 1 565 1.00000 1 1 Ratio of children below 15 in 157 0.18172 0 0.67 565 0.06024 0 1 household Wall: concrete, brick, stone 157 0.37717 0 1 565 0.92743 0 1 Source: CSES 2012 data. Appendix G: Gravity Model The gravity model is now considered to be an impor- between countries i and j. The GDP terms represent tant part of the empirical analysis of trade flows.  The the gross domestic product of each country. The basic idea behind the gravity model is that trade flows variable X includes a range of other variables, which between country pairs can largely be explained by the may include country controls, multilateral resistance size of, and the distance between, the two countries.  controls (Anderson and van Wincoop 2003), shared The gravity model’s empirical relevance became under- border, language, being landlocked, and so on. In our stood in the 1970s and was followed by theoretical exercise, we also add variables to capture the exporter’s foundations (see Anderson 2011 for a review of the production characteristics (such as the amount of theoretical development of the gravity model).  imported inputs). The gravity model has been applied to many impor- tant questions in international economics, including the analysis of trade policies.  Rose (2004) used the gravity References model to make the controversial suggestion that the Anderson, James E. 2011. “The Gravity Model,” Annual WTO did not increase trade flows among members.  Review of Economics, Annual Reviews, vol. 3(1), Subsequent research by Subramanian and Wei (2007) pages 133–160. and Baier and Bergstrand (2007) and others built on Anderson, James, and van Wincoop, Eric. 2003. Anderson and van Wincoop (2003) to revise the gravity “Gravity with Gravitas: A Solution to the Border methodology to show how trade agreements contribute Puzzle,” American Economic Review, Vol. 93, No. 1, substantially to trade flows.  Readers interested in fur- pp. 170–92. ther details about the gravity model are referred to the Baier, Scott L. and Jeffrey H. Bergstrand. 2007. “Do references below, and especially Bergstrand and Egger free trade agreements actually increase members’ (2009) who review some of the more recent contribu- international trade?” Journal of International Eco- tions to the gravity model literature. nomics, 71(1), 72–95. The gravity model applied in this paper is a very Bergstrand, Jeffrey H. and Egger, Peter. 2009. “Grav- simplified version of the gravity model that appears ity Equations and Economic Frictions in the World in at least hundreds of papers in the literature.  The Economy,” in Daniel Bernhofen, Rodney Falvey, first main simplification is that the data focus on both David Greenaway and Udo Krieckemeier, eds., global pair-wise trade flows and just U.S. imports.  The Palgrave Handbook of International Trade, Palgrave second is that the data focus on apparel rather than Macmillan Press. total trade flows.  The third main simplification is that Rose, Andrew K. 2004. “Do We Really Know That the data use dummy variables to capture the effect of The WTO Increases Trade?,” American Economic the Better Work program, as explained in the text.     Review, v94(1, Mar.), 98–114.  The primitive gravity model equation we use is as Subramanian, Arvind and Wei, Shang-Jin. 2007. “The follows. WTO promotes trade, strongly but unevenly,” Jour- nal of International Economics, Elsevier, vol. 72(1), tradeijt = b0 + b1distij + b2GDPit + b3GDPjt + BXijt + eijt pages 151–175, May. Trade is the bilateral (apparel) trade between coun- tries i and j. The variable dist represents the distance 127