“When [workers] have no freedom of association, no collective bargaining, and no decent work, it completely undermines a [company’s] code of conduct” —Laura Carter, IndustriALL Global Union
“I always say that there’s no such thing as a worker that wants to work overtime. Instead there are workers that want to make more money, but because they don’t know how to ask for higher wages, they ask to work more hours.” —Louis Vanegas, New Balance
“We need to send messages within our companies that suppliers need to be rewarded with a more stable partnership and work environment [in exchange for doing away with precarious work] so that they can continue to make amends at the factory level.” —Louis Vanegas New Balance
Flaherty opened the session by providing an overview of the issue of precarious work, where short-term labor contracting practices that deny workers basic benefits of employment. He said that although short-term contracting is in fact legal in many countries, it often denies workers wages, benefits, and collective bargaining rights and leaves them vulnerable to arbitrary dismissal without legal or contractual protection. This trend is on the rise globally. Flaherty explained that the session would focus on the issue of precarious work in Peru, since both speakers participate in the Americas Group, which recently completed a deep-dive study on precarious work in the country.
Carter began the session by saying that although there has been much success in reducing the environmental impact of the garment industry in recent years, there has not been equal progress on the state of precarious work and temporary contracts. She said that companies who want to have a positive impact on workers’ lives must address the issue of precarious work, including both disguised employment and short-term employment situations.
Carter then spoke about the situation of precarious work in Peru, where employers have the right to employ workers on short-term (lasting from one month to six months) which are in fact unstable and irregular and do not guarantee continuous employment. Between 2009 and 2010, there were 11 cases in which the Ministry of Labor in Peru ruled that workers with short-term contracts were actually holding permanent positions and that their contracts should be altered accordingly. To date, however, no changes have been made—a reality that highlights the difficulty in addressing this issue.
Next, Vanegas spoke about his experience of precarious work from the buyer perspective and shared examples of his experience of the Dominican Republic, Columbia and Peru. He underlined the fact that working practices of this nature exist all over the world, including the U.S. and Canada. He said that this issue has become so prevalent that workers are starting to prefer short-term contracts because of the severance pay they receive at the end of their contracts however they do not recognize the long-term benefits associated with more stable contracts.
Vanegas elaborated that although precarious work presents serious challenges to both workers and buyers, there are also opportunities to address this issue through multi-stakeholder efforts, such as the work of the Americas Group. The challenges associated with precarious work include:
Vanegas then identified opportunities for how companies can effectively tackle precarious work. These include the need for companies to:
After the presentations by Carter and Vanegas, Flaherty posed questions to the panel. The first question focused on how global brands can pressure suppliers to change their practices regarding precarious work. Vanegas responded by saying that buyers need to stress that workers are not productive when they are not happy on the job and that suppliers will experience high turnover rates and decreased performance due to unstable working conditions, if they rely on successive short-term contracts.
Flaherty then asked Carter what the role of global companies should be in addressing regulations and policies that actually keep precarious work legal in many countries. Carter said that companies have a lot of power and should use their influence as buyers to outlaw temporary work in instances where it’s not needed.
To conclude, Flaherty opened up the session to questions from the floor. One audience member asked if any studies demonstrated that suppliers who don’t rely on precarious work are actually more productive. Vanegas said that some companies in Latin America that don’t use short-term contracts are still competitive in the market. Flaherty added that there are opportunities to conduct further studies to prove the return on investment for suppliers that don’t rely on these practices.
A representative from Gap Inc. then shared lessons about how the company modified its code of conduct to ensure that short-term contracts are not used as a way to avoid paying benefits. Although monitoring requires raising the bar on due diligence, it ensures that workers are not exploited and that they receive the long-term benefits that they deserve.