Background of the complaint against Lidl

Transcription

1 Background of the complaint against Lidl (by Gisela Buckhardt CCC Germany) Since a few years the Kampagne für Saubere Kleiding (Clean Clothes Campaign, CCC, Germany) has taken action for the improvement of working conditions at the garment suppliers of discount retailers and for the employees of retail chains in Germany. It s predominantly women who have to work for incredibly low wages both in producing countries and in Germany. In January 2008 the Kampagne für Saubere Kleidung published the brochure: Wer bezahlt unsere Kleidung bei Lidl und Kik? Arbeitskraft zum Discountpreis- Schnäppchen für alle? (Who pays our clothes at Lidl and Kik? Labour for discount price bargains for everyone?). With this brochure the CCC for the first time confronted the discount retailer Lidl with labour and human rights violations at their garment suppliers (producers) in Bangladesh. Research in 2007 at five producers for Lidl in Bangladesh showed grave labour right violations: compulsory overtime, nontransparent and irregular payment of overtime, no factory had a works council, supervisors took a discriminatory attitude against women, etc. The working conditions at the discount retailers Lidl and Kik in Germany were also researched. In February 2009 another publication by the international CCC, Cashing In, (published in German as Kassensturz ), followed, which found labour right violations at Lidl, Aldi, Walmart, Tesco and Carrefour suppliers in four Asian countries (Sri Lanka, India, Bangladesh and Thailand). On the occasion of the World Day for Decent Work on 7 October 2009 the CCC presented to Lidl more than 1000 protest postcards that had been signed by consumers and had been attached onto a 400 m long ribbon. CCC spoke to Lidl in March 2008 and again in 2009, and expressed its criticism of the working conditions at Lidl suppliers not only in Bangladesh, but in all producing countries. Also the situation of the workers in Germany unpaid overtime, obstruction of works councils, etc. was raised. After the publications and the growing public criticism, Lidl ordered several consulting firms to organise trainings for their suppliers on social standards. In any case Lidl was not willing to pay decent prices for the supplied goods quite the contrary: according to statements by producers in Bangladesh the prices for supplied goods had been strongly reduced during the last few years more or less up to one third. But how could producers comply with social standards, if they constantly get less money for their goods? Instead of engaging in a dialogue of equal partners with their suppliers and assisting them in their efforts to comply with the social standards, the producers received orders that had to be executed. Instead of showing real interest and readiness to change, Lidl rather wants an improved public image. Lidl told the CCC and the consumers that between 2006 and February 2010 they had executed more than audits and re-audits in factories to monitor the compliance with social standards. According to Lidl the trainings for suppliers resulted in better compliance with social norms. But according to information of the CCC the pressure has led to more deceit and falsification of documents rather than to a genuine improvement of working conditions. Impressions after talks with partners in Bangladesh had to be verified and therefore the Alternative Movement for Resources and Freedom Society (AMRF) was asked to interview workers at Lidl suppliers in Bangladesh. In doing this attention was paid that the suppliers had already been trained by 1

2 the consulting firms as ordered by Lidl, or were undergoing the training program at that moment. So the factories involved were demonstration factories, whose management had been formed and trained further on social standards. The result of this research is presented here. 1. What is the BSCI? Lidl is proud of its membership of the Business Social Compliance Initiative (BSCI). This association of by now more than 470 companies at the European level aims according to their own statement at the compliance with specified social and environmental standards by their suppliers. BSCI has adopted its own code of conduct and Lidl believes its own adopted code has the same content. But in public, e.g. on its website, one cannot find its code. The CCC criticizes BSCI as an initiative that a lot of companies abuse to assume a social image or to commit social whitewashing. More in particular the CCC denounces the following: A central BSCI tool is the auditing of factories of members suppliers. The emphasis lies on inspection and checking, not on support for the producers to comply with social standards (e.g. establishing complaint systems, training of management and of workers through unions and NGOs). The social audits are performed by commercial auditing firms. They are paid for their work by BSCI-members like Lidl, so the audits are not performed by independent external inspectors. Local NGOs and unions are not systematically involved. In many cases the quality and credibility of these audits must be questioned. The BSCI code of conduct does not oblige factories to pay a living wage, only the local minimum wage. In many producing countries that is insufficient to survive. The BSCI is a pure business initiative without a voice for other stakeholders (trade-unions and NGOs) The BSCI is not transparent: suppliers names are not given, nor are the audit results of individual factories made public. At best the BSCI is an instrument to publicly pretend a commitment for social standards, but the CCC on-site researches show that working conditions (wages, hours of work, freedom of association) practically do not change at all. That is unsurprising, because it is the purchasing policies of the multinational companies that decide whether labour and human rights are really observed in the producing countries. But the companies are not willing to pay higher prices, which could result into higher wages for the workers. 2. Whitewashing Companies against binding social standards Corporate Social Responsibility (CSR) has become the fashionable expression, with which more and more companies adorn themselves. A social image is becoming more and more important. In their shopping decisions consumers are taking into consideration more and more information on companies social and environmental conduct. Shareholders are also more and more interested in socially responsible investment. Rating agencies assess companies on the basis of sustainability indicators, whereby also social commitment is assessed. For experts it is evident that charitable projects with which companies like adorning themselves, are all too lightly exposed as fig leaves. Credibility can only be established when social standards are respected in the core business. Translated for Lidl, this means that fairglobe products 2

3 (from fair trade) do not make Lidl a socially responsible company, as long as the other products are manufactured under violation of social standards, and tradeunions and works councils are not welcome by the Lidl management. The association of companies in the BSCI is also an attempt to prevent binding social standards from the side of the EU or individual governments. Time and again the companies emphasise that social standards are voluntary obligations and should remain so. They do not want binding legal regulations. If companies are serious about social norms, why are they afraid of legal guidelines? In fact it should be in their own interest that governments or the EU make the compliance with social minimum standards binding for the whole supply chain, because then everyone should abide by them, also the competition. That would limit the global race to the bottom. The introduction of binding social standards would imply that companies could be made accountable for human rights violations and environmental destruction throughout the production chain. Since a long time the CCC demands an obligation for companies to publish an annual report on the compliance with social standards in their supply chain. Such an obligation to publish exists in e.g. the UK for companies quoted on the stock exchange. The current German Consumer Information Law does not deserve its name, because it does not enable consumers to obtain information about the production process. There is no possibility for consumers to find out how a product has been manufactured, nor whether social standards have been complied with. Due to the failure of the Federal Government in the area of obligations to provide information to consumers, companies can deceive consumers with their social whitewashing measures. 3. Lidl s misleading advertising Complaint against Lidl Lidl advertises that it joined BSCI as early as But according to Lidl s own statements, the discount retailer didn t know most of its producers/suppliers in 2008, because most purchasing was done through importers. Not until the CCC criticism, did Lidl start to have a closer look at its suppliers. Its two-year membership of BSCI apparently hadn t obliged the company to engage itself with the social standards of its suppliers although this is exactly the BSCI s objective. In the meantime four years have gone by since Lidl became a member of BSCI and unfortunately, as this report shows, the working conditions of the seamstresses onsite haven t improved a bit. However, Lidl advertises on its website and in answers to consumers inquiries with the following statements: Lidl is aware of its responsibility in the production of its goods and through intensive efforts and several commitments during the last years has taken a leading role in the food retailing sector in the improvement of social standards in the producing countries. In contrast with other business enterprises Lidl actively takes account of the compliance with social standards in the production sites in its purchasing decisions. Lidl has implemented the following measures: 1. Lidl is a member of the Business Social Compliance Initiative (BSCI). As the first German discount retailer Lidl already joined the common initiative Business Social Compliance Initiative (BSCI) in BSCI was developed in the framework of the European Foreign Trade Association. More information can be found at Like all BSCI members Lidl s aim is to declare uniform social minimum standards binding for the suppliers in the different countries and to monitor their compliance through a corresponding monitoring system. To reach this goal Lidl has developed its own code of conduct, which corresponds with the BSCI guidelines and to the compliance of which the suppliers with whom Lidl cooperates, engage themselves. The monitoring of the social standards is 3

4 performed by internationally accredited, independent auditing institutions. (Lidl s written standard answer to consumers) In an advertising prospectus (1/2010) Lidl writes: Lidl worldwide dedicates itself to fair working conditions and We at Lidl therefore only accept non-food bids from selected suppliers and producers, who are willing to actively adopt social responsibility and can show they do so. We ask: is that not misleading the consumers? Doesn t this suggest to the consumers that the Lidl suppliers comply with the social standards? Whereas BSCI speaks about the aim of complying with the social standards, Lidl publicly expresses itself in a way that consumers can get the impression that the standards are currently already complied with. In this way the consumers are deceived, with which Lidl obtains for itself a competitive advantage vis-à-vis its competitors. Because companies cannot deceive consumers so easily, the CCC supports a complaint of the Verbraucherzentrale Hamburg (VZHH - Consumer Association Hamburg) against Lidl because of unfair competition. Legal support is also supplied by the European Centre for Constitutional and Human Rights (ECCHR). The complaint concerns two aspects of the deception of the consumers: 1. Advertising with the BSCI Code of Conduct in the sense that the code of conduct would assure the compliance with social standards. Customers trust this. The BSCI code, though, does not imply it. It only refers to the aim of reaching compliance by its suppliers with specified social and environmental standards. This small but fine difference hardly attracts the attention of most readers. That s precisely why the business initiative is so suitable for social whitewashing, because it doesn t commit them to genuine compliance, but only to aiming at the goal. 2. The other deception of the consumers consists in the fact that reality at the Lidl suppliers looks completely different from what the code assures. This was investigated through research at four Lidl suppliers in Bangladesh and the results are presented here. 4. Exemplary analysis of some elements of the BSCI Code Because Lidl refers to the BSCI Code of conduct and claims it is equal to its own, we will cite relevant passages from the BSCI code. In addition the ILO conventions are mentioned, to which BSCI refers. The following elements of the BSCI code were investigated in the four factories: Working hours: The maximum allowable working hours in a week are as defined by national law but shall not on a regular basis exceed 48 hours and the maximum allowable overtime hours in a week shall not exceed 12 hours.. An employee is entitled to at least one free day following six consecutive days worked. In accordance with ILO Conventions 1 and 14. Voluntary overwork: On this the BSCI code states: Overtime hours are to be worked solely on a voluntary basis and to be paid at a premium rate.. Prohibition of wage deductions and disciplinary measures: Deductions from wages as a disciplinary measure are forbidden, unless this is permitted by national law and a freely negotiated collective bargaining agreement is in force. Supplier companies shall ensure that wage and benefits composition are detailed clearly and regularly for 4

5 workers. The company shall not engage in or tolerate the use of corporal punishment, mental or physical coercion and verbal abuse of personnel.. In accordance with ILO Conventions 29 and 105 Freedom of association and the right to collective bargaining: All personnel shall have the right to form, join, and organise trade unions of their choice and to bargain collectively on their behalf with the company. The company shall respect this right, and shall effectively inform personnel that they are free to join an organisation of their choosing and that their doing so will not result in any negative consequences to them, or retaliation, from the company. The company shall not in any way interfere with the establishment, functioning, or administration of such workers organisations or collective bargaining. In situations where the right to freedom of association and collective bargaining are restricted under law, the company shall allow workers to freely elect their own representatives. The company shall ensure that representatives of workers and any personnel engaged in organizing workers are not subjected to discrimination, harassment, intimidation, or retaliation for reason of their being members of a union or participating in trade union activities, and that such representatives have access to their members in the workplace.. In accordance with ILO Conventions 87, 98,135 and 154. Prohibition of discrimination: No discrimination shall be tolerated in hiring, remuneration, access to training, promotion, termination or retirement based on gender, age, religion, race, caste, birth, social background, disability, ethnic and national origin, nationality, membership in workers organisations including unions, political affiliation or opinions, sexual orientation, family responsibilities, marital status, or any other condition that could give rise to discrimination.. In accordance with ILO Conventions 100, 111, 143, 158,