Factory workers in apparel supply chains are more likely to quit due to wage and benefit violations, relative to violations of other code provisions, such as environment protection and safety standards, new research has found.
- The findings are from a study conducted at the Cornell University ILR School by Sarosh Kuruvilla, the Andrew J Nathanson Family Professor in Industrial and Labour Relations.
- The paper, 'Corporate Codes of Conduct and Labour Turnover in Global Apparel Supply Chains', has been published in the British Journal of Industrial Relations. Kuruvilla's co-author is Chunyun Li of the London School of Economics and Political Science.
The Context: More than two decades ago, after attention was drawn to sweatshop conditions in supplier factories, multinational corporations in the apparel and fashion industries adopted codes of conduct regarding labour rights and working conditions for their supply chain factories.
- Apparel firms instituted this system—commonly referred to as private regulation—primarily to gain legitimacy in their home markets.
- But, new research says factory workers evaluate their working conditions differently.
The Findings: Corporations want to look good in front of their customers. So, the supplier factories are told by their global buyers that they have to respect all of these rights and standards embodied in the codes, including paying a wage that affords workers a decent living.
- However, global buyers do not necessarily pay a higher price for their product to the factory. So, the factory gets squeezed.
- That squeeze results in factory owners cutting as many corners as possible in order to survive.
- The resulting poor working conditions lead to a tremendous amount of turnover—as high as 50% a year in some areas.
- The researchers found that the overwhelming reason for the turnover stems from wage and benefits violations. They secured supply chain data from a multinational company, and compared code violations and turnover rates at 622 factories in 28 countries.
What They Said:
Only wages matter. Workers are willing to take all kinds of other hardships—having no air conditioning, being exposed to dangerous chemicals—they're not going to leave the factory for that. But the promises the company made that its suppliers would pay workers a living wage—one that is enough to meet basic needs and to provide some discretionary income—is not being realised.
— Sarosh Kuruvilla
Andrew J Nathanson Family Professor in Industrial and Labour Relations
Cornell University ILR School
The Relevance: The new research will inform the rules currently being developed under two new laws in the European Union, which will now mandate what was previously private voluntary regulation and will require companies to report on the effects of their environmental and social policies in their supply chains.
- The first law, known as the mandatory due diligence law, will also allow aggrieved supply chain workers to sue European companies in European courts.
- This research is the first to look at turnover rates of workers in the low-cost global apparel supply chain.
- The study result highlights the importance of paying higher wages, and holding companies accountable for their promises to pay a living wage in their supply chain factories.
