Tue, 09 May 2000

Social responsibility issues in business

This is the second of two articles on business responsibility by Mayling Oey-Gardiner and Peter Gardiner, both social scientists and principal investigators in a factory human rights audit for the Reebok shoe producer referred to below.

JAKARTA (JP): The second approach for obtaining better conditions for workers, by working with both management and workers in a transparent manner, was applied by Insan Hitawasana Sejahtera (IHS), an independent social science research and consulting firm.

The method was applied to two factories producing Reebok athletic shoes that account for about 75 percent of Reebok's footwear production in Indonesia.

IHS conducted a comprehensive evaluation of factory compliance with Reebok's own Human Rights Production Standards and with Indonesian legal requirements.

For this purpose IHS assembled a team of specialists in the areas of research, labor relations, and occupation health and safety.

A three-pronged approach was applied, consisting of a quantitative worker survey, in-depth worker interviews and on- site observation.

The IHS team had full access to all factory records and workers, and spent over 1,400 hours inspecting the factories and conducting interviews with management and workers.

The research was conducted in three distinct stages to demonstrate a problem-solving commitment. Initial findings were produced to identify all factory problems and these were communicated to Reebok and factory management.

Following this, factories, with technical assistance from Reebok were given time to take action to correct these problems or to establish clear action plans for future application.

Finally, IHS conducted a follow-up evaluation to review progress and to provide further critiques of factory actions.

To ensure transparency and openness, the results were published by IHS and Reebok under the title of Peduli Hak: Caring for Rights.

Publication did not mean an attempt to gloss over problems. Some fairly disturbing facts about working conditions in these factories were highlighted.

For example, the report criticized the way the factory managers communicated with workers, noting that most workers were functionally illiterate and could not understand their rights under existing collective bargaining agreements or the details of their wage statements.

It also found that it was more difficult for women than men to obtain promotions or supervisory positions. It faulted the factories' health and safety procedures -- in particular the procedures governing the use and handling of chemicals.

On the other side of the coin, the report offered encouragement by documenting the positive steps taken by the factories to address the problems as seen in the results of the follow-up evaluation.

By adopting an approach of working with all the major stockholders -- Reebok, factory management and the workers -- IHS felt that tangible benefits for the workers were more likely to result.

Similar to the findings of Press for Change, IHS found that workers were mostly concerned with wages and overtime -- particularly forced overtime where workers were not given a choice.

But by working with all parties, improvements were made not only in salary and overtime conditions, but also in regards to workers rights to freedom of association, gender equity, and most important of all, health and safety on the factory floor.

The factories had to make substantial investments (each more than US$ 250,000) to improve the work environment.

For instance, hundreds of chairs and numerous items of personal protective equipment were replaced, ventilation and emission was improved, relevant workers learned about proper chemical handling procedures, and so on.

Improvements in working conditions were acknowledged by workers during the follow-up evaluation.

Even though business social responsibility appears to be a concern of consumers in rich countries, producers or suppliers in poor countries, including Indonesia, are affected.

Proper attention to employee rights and working conditions by employers is a must.

And, if employers do not know whether they are on the right track, they need to seek assistance.

A new organization, the Fair Labor Association is developing and monitoring programs with the support of such companies as Reebok, Adidas-Salamon AG, Kathie Lee Gifford, Levi Strauss & Co., Liz Claiborne, L.L. Bean, Nicole Miller, Nike, Patagonia, Phillips Van Heusen.

Activities of this type, and continuing attention to the obligation to be socially responsible, must increasingly become part of normal business operations in the future.