Better Work Lesotho: Garment Industry 3 nd Compliance Synthesis Report

Better Work Lesotho: Garment Industry 3 nd Compliance Synthesis Report Produced on 15 September 2014 Reporting period: January 2013-April 2014 Number of factory assessments in this report: 19 Country: Lesotho Better Work Lesotho is supported by the US Department of Labor i

Copyright International Labour Organization (ILO) and International Finance Corporation (IFC) (2014) First published (2014) Publications of the ILO enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the ILO, acting on behalf of both organizations: ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: pubdroit@ilo.org. The IFC and ILO welcome such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. ILO Cataloguing in Publication Data Better Work Lesotho : garment industry 2 nd compliance synthesis report / International Labour Office ; International Finance Corporation. - Geneva: ILO, 2014 1 v. ISSN 2227-958X (web pdf) International Labour Office; International Finance Corporation clothing industry / textile industry / working conditions / workers rights / labour legislation / ILO Convention / international labour standards / comment / application / Lesotho 08.09.3 The designations employed in this, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the IFC or ILO concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the IFC or ILO of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the IFC or ILO, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by email: pubvente@ilo.org Visit our website: www.ilo.org/publns Copyright International Labour Organization (ILO) and International Finance Corporation (IFC) (2014) First published (2013) ii

Table of Contents Section I: Introduction and Methodology... 6 Introduction... 6 Institutional Context... 8 Better Work Methodology... 10 Calculating Non-Compliance... 11 Note on the factories represented in this report... 11 Limitations in the assessment process... 11 Section II: Findings... 13 Average Non-Compliance Rates... 13 Detailed Findings... 16 1. Core Labour Standards... 16 2. Working Conditions... 16 Section III: Changes in Compliance... 22 Conclusions and Next Steps... 25 Annexes... 27 Annex A: Factories Covered in this Report... 27 Annex B: Buyers Participating in Better Work Lesotho... 27 List of Tables In Focus 1 Wage Information, Use and Deduction... 16 In Focus 2 Emergency Preparedness... 17 In Focus 3 Health Services and First Aid... 18 In Focus 4 Worker Protection... 18 In Focus 5 Working Environment... 19 In Focus 6 Welfare Facilities... 19 In Focus 7 Chemicals and Hazardous Substances... 19 iii

Executive Summary Better Work Lesotho is a partnership program of the International Labour Organization (ILO) and the International Finance Corporation (IFC). It provides assessment, advisory and training services to Lesotho s garment industry with the aim to improve working conditions and promote competitiveness in global supply chains. The first Compliance Synthesis Report was published in May 2012 and the second in April 2013. They presented aggregated findings of 10 and 14 factories respectively. This report covers 19 factories assessed by Better Work Lesotho between January 2013 and April 2014. Of the 19 factories, 13 were assessed for a second time, and six had their first assessment. These factories employ approximately 24.930 workers, of which about 80% are women workers. On average, each factory employs 1.385 workers. Major findings resulting from the analysis of aggregated data in this report are presented below. Assessed factories performed well with respect to international core labour standards: Child Labour: No cases of child labour were detected. Discrimination: There was one non-compliance finding for discrimination based on gender due to sexual harassment of female garment workers by their supervisor. Forced Labour: No findings were uncovered with respect to coercion, bonded labour, forced labour and overtime or prison labour. Freedom of Association: One factory had a non-compliance finding under this cluster where the management refused to meet with unions to discuss recognition issues and unions access to their members in the workplace. Assessed factories had noticeably more non-compliance findings under Working Conditions clusters regulated by national labour law: Compensation: Most non-compliances in this cluster were detected under Wage Information, Use and Deduction as eight factories had more than one accurate wage record. Other non-compliances were identified for non-payment of sick leave, incorrect payment of wages on public holidays, a delay in paying wages and payment of wages below the legal minimum. Contracts and Human Resources: Seven factories had a non-compliance under Employment Contracts because workers did not understand terms and conditions of their contract. Six factories did not meet compliance requirements under Dialogue, Discipline and Disputes due to verbal harassment of workers by supervisors. Page 4 of 27

Occupational Safety and Health: For three compliance points, including Emergency Preparedness, Health Services & First Aid and Worker Protection, the non-compliance rate reached 100%. Relatively high non-compliance was also identified for Working Environment, Welfare Facilities, Chemicals & Hazardous Substances and OSH Management Systems, with average NC rates ranging from 47% to 68%. Five factories were out of compliance with emergency preparedness under Worker Accommodation. Working Time: Under this cluster non-compliances were most frequent for issues relating to Regular Hours, including inaccurate working time records (which did not reflect the hours actually worked) and nonprovision of 2-days off for security guards. Non-compliances were also found for overtime exceeding the legal limit and non-provision of a one-hour breastfeeding break. The program is assisting factories in the remediation of non-compliance findings through various training, including on occupational safety and health, supervisory skills and HR Management. Training and advisory services promote factories capacity to conduct training themselves through in-house trainers and to develop systems-based approaches that foster compliance improvement in a sustainable manner. Performance Improvement Consultative Committees (PICCs) continue to play a key role in the development, implementation and monitoring of remediation measures and in strengthening social dialogue in the workplace. *** Compliance performance data included in this report for 13 factories with a second assessment show improvement under Freedom of Association & Collective Bargaining where factories solved issues relating to Freedom to Associate (joining a union) and Interference and Discrimination. A decline in compliance performance was measured for gender-based discrimination due to a case of sexual harassment. There was also improvement under all national labour law clusters. For Compensation, Contracts and Human Resources and Working Time all compliance points showed an increase in compliance. Improvement gains were highest under Dialogue, Discipline and Disputes (less verbal harassment) and Regular Hours (providing workers with breastfeeding hours). Also most compliance points under OSH did improve, with the highest percentage increase recorded for Welfare Facilities and Working Environment (better access to and improved hygiene in toilets, improved storage facilities for workers belongings, less issues with workplace temperature and obstructed passageways). Of the 13 factories that had a second assessment, 11 showed improvement in their total compliance rate. Page 5 of 27

Introduction Section I: Introduction and Methodology Better Work Lesotho (BWL) is a partnership program of the International Labour Organization (ILO) and the International Finance Corporation (IFC). In order to strengthen the country s export position in global apparel markets after the phasing out of the Multi-Fibre Agreement in 2005, national stakeholders expressed their interest in a Better Work program and agreed during its preparation phase to establish Lesotho as an ethical sourcing destination. BWL aims to accomplish this objective by improving the industry s compliance with ILO core labour standards and the Lesotho national labour law and by promoting its competitiveness in global supply chains. It is embedded in the ILO Decent Work Country Program for Lesotho (phase II, 2012-2017), whose ultimate goal is to reduce poverty by expanding decent work opportunities in targeted export sectors. BWL is currently in its second phase (January 2014 December 2016) which focuses on building factories ownership in compliance improvement processes and assisting them in adopting systemsbased approaches to improvement. It is financed by the United States Department of Labor (USDOL). At the end of March 2014, a total of 39 garment factories employed almost 38,600 workers 1. Between March 2013 and March 2014, overall employment in garments increased slightly by 1.8% whereas in footwear, consisting of just three factories, employment fell from 2,686 to 2,230. The garment and footwear sector continues to be critical for the labour market as it represents about 80% of all formal jobs in manufacturing. Approximately 80% of jobs in the industry are held by women, and it is estimated that the HIV infection rate in the sector reaches 43% 2. According to latest available data from 2009, Lesotho faces a high overall unemployment rate of 25.3% 3, and youth unemployment even reaches 39.8% 4. As of July 2014, 16 out of 41 garment and footwear factories in total had enrolled in BWL under a voluntary sign-up approach. They cover 61% of the total workforce in this sector. The majority of factories exporting to South Africa (19 out of 22 factories) continue to remain outside the program, which more or less limits the program s labour compliance reporting to factories exporting to the US market. Lesotho s economy is a main beneficiary from the preferential trade agreements under the African Growth and Opportunity Act (AGOA), which grant duty- and quota-free export of apparel products from qualifying sub-saharan African countries into the US. Although export figures do not reach any longer levels recorded a decade earlier, among AGOA eligible countries Lesotho continues to lead apparel exports into the US in value terms. In 2013 Lesotho exported USD 321.3 million worth of garments to the US market, a growth of 6.7% compared to the value in 2012. Also, Lesotho is the second largest exporter of garments into the US in volume terms only topped by Kenya. Its exports, measured in m² equivalents, grew from 67.131 million in 2012 to 71.406 million in 2013, a 6.4% increase (in 2013 Kenya, in comparison, exported 92.929 million m² equivalents to the US) 5. 1 Lesotho National Development Corporation (LNDC), Industry Status Report January March 2014. 2 Report: Alliance of Lesotho Apparel to Fight AIDS (ALAFA) Interventions in the Lesotho Garment Industry, June 2012 3 Lesotho Integrated Labour Force Survey (2008) 4 UNDP Youth Survey (2013) 5 Export value and volume data from LNDC Industry Status Report January March 2014 (primary source: US Africa Trade Report, February 2014) Page 6 of 27

Over the last years apparel exports into South Africa have been growing in importance. Of the country s 41 factories, 22 are now producing for the local market, their exports into South Africa counting for 30% of total apparel exports in volume terms. Exports to the EU remain negligible. As per reports of the Lesotho National Development Corporation (LNDC), the reasons for this being insufficient skills to manufacture products of higher value, inflexible production and traditional, USfocused sales strategies. As US exporting companies still provide the majority of jobs in the apparel sector (60% against 40% created by companies producing for the local market) and in the absence of meaningful labourintensive industries in sectors other than garments, a continuation of AGOA for the generation of jobs and income remains crucial for Lesotho s economy. Present US regulation provides for AGOA only until September 2015. Ownership and management structures in Lesotho s garment and footwear industry have remained unchanged. The industry is built on foreign direct investment from Taiwan, mainland China and South Africa. The percentage of Basotho nationals in management and qualified technical positions, such as assistant factory or production manager, is still low. The industry is in need of a comprehensive skills development program which is addressing gaps at managerial and technical/ engineering level. The high HIV infection rate among garment workers poses a big challenge to the industry. The recent closure of an HIV/AIDS treatment, care and prevention program, known as ALAFA, which had to exit due to funding issues, has led to uncertainty within the industry about how and by whom care and treatment will be managed in the future. The program s services were delivered on-site which helped to reduce absenteeism and the disruption of production. It was able to reach out to 90% of the industry. The Government is currently developing a new care and treatment system which will be coordinated by an external service provider. The new approach shall lead to sustainable, factorybased treatment structures within 24 months. There is need to put in place a sector-wide functioning care and treatment system soonest to ensure that workers continue to receive medical care on-site. *** Page 7 of 27

Institutional Context BWL works closely with national program stakeholders and international buyers through different committees and forums. At national level, a tripartite Project Advisory Committee (PAC) discusses progress and challenges in program implementation and key issues relating to labour compliance, industrial relations and the industry s competitiveness (where within the scope of the program). The Committee meets two to three times per year. Represented stakeholder agencies include the Ministry of Labour and Employment (MoLE), the Ministry of Trade, Industry, Cooperatives and Marketing, LNDC, the Lesotho Textile Exporters Association and the Association of Lesotho Employers and Business. Garment industry workers are represented by the five sectoral unions, including the Lesotho Clothing and Allied Workers Union, the Factory Workers Union, the National Union of Textile, the United Textile Employees and Lentsoe Le Sechaba (The Voice of Workers). The annual Buyers Forum is another element of BWL s consultation mechanisms with program stakeholders. It offers buyers who have subscribed to the program the opportunity to engage with the BWL team as well as country level stakeholders to discuss sector-wide labour compliance performance and industry developments. The Forum assists in generating ideas and identifying solutions for the remediation and management of specific compliance issues. At factory level, stakeholder engagement is facilitated through Performance Improvement Consultative Committees (PICCs) which consist of an equal number of management and worker representatives (the latter comprising shop stewards from unions represented in the factory and a smaller number of non-organized workers). PICCs are tasked with the development, implementation and monitoring of factory improvement plans to address areas of non-compliance as identified in the factory assessments. By having a bipartite structure, PICCs also aim to improve social dialogue in the workplace and promote workplace cooperation. Of the 19 factories covered in this report about 80% currently have a PICC. Workers in factories with well functioning PICCs report that communication with the management has improved and that they appreciate the PICC also as a platform for learning. Two documents, a zero tolerance protocol (ZTP) and a cooperation agreement, signed by the MoLE and BWL in May 2013, outline further areas of collaboration between the two organizations. The ZTP includes communication guidelines with the MoLE to manage follow up on zero tolerance issues detected during assessment visits. The cooperation agreement summarizes different collaboration activities with the MoLE, such as regular meetings on labour law interpretation or training. In April 2014, as per the advice of the Parliamentary Council of Lesotho, the MoLE re-launched the labour legislation review process which initially started in 2006. Informed by extensive stakeholder consultations to identify the key areas for reform, the revision process aims to consolidate existing labour legislation and proposed amendments into one piece of legislation. It is led by the MoLE and a national task team who, in the months to come, will finetune the recommendations for reform. The current schedule anticipates that the new revised labour code will be passed by Parliament at the end of 2015. Suggested reforms include, among others, changes under labour administration (key labour market institutions), collective bargaining and occupational safety and health. Also, given the country s high unemployment rate and skills development needs, it was advised that reforms should take into account employment and labour market policy priorities. As per the Wages (Amendment) Order from October 2013, an employee in textile, clothing and leather manufacturing is now entitled to receive six weeks of paid maternity leave instead of only Page 8 of 27

two weeks in the past. This increase is an important step toward closing the gap between maternity benefits paid in the country s main industry sector and maternity benefits granted in other sectors. Employees in construction, wholesale, retail, hospitality, funeral and cleaning services, transport, small business and domestic work are entitled to receive twelve weeks of paid maternity leave. In the course of finalizing the Labour Code revision or by other policy means, such as a Social Security Scheme that the MoLE intends to develop, the Ministry could consider promoting a decent level of paid maternity leave for all women workers covered under the Labour Code, independent of the sector they are working in. Prior to the start of the program national stakeholders made the commitment to implement the Better Work program in Lesotho industry-wide to enhance its effectiveness and build a credible reputation for socially responsible manufacturing throughout the garment industry. As the number of factory subscriptions under a voluntary sign-up approach continues to remain low, the Government should, in honoring its commitment, adopt a regulation that would facilitate industrywide participation and allow maximization of the program s benefits and opportunities. Page 9 of 27

Working Conditions Core Labour Standards Better Work Methodology Better Work carries out factory assessments to monitor compliance with international labour standards and national labour law. In its factory and industry-level reports, it highlights noncompliance findings. Better Work reports these figures to help factories easily identify areas in need of improvement. Collecting and reporting this data over time will help factories demonstrate their commitment to improving working conditions. Better Work organizes reporting into eight areas, or clusters, of labour standards. Four of the clusters are based on fundamental rights at work regarding child labour, discrimination, forced labour, and freedom of association and collective bargaining. In 1998, member states, workers, and employer representatives at the International Labour Organization identified fundamental principles and rights at work regarding these four issues based on eight very widely ratified International Labour Conventions (29, 87, 98, 105, 100, 111, 138, and 182). These Conventions provide the baseline for compliance with the fundamental rights clusters across all Better Work country programs. The four other clusters monitor compliance with standards primarily set by national law, so they vary from country to country. This set consists of compensation, contracts and human resources, occupational safety and health, and working time. Each of the eight clusters is divided into its key components. These components are known as compliance points (CPs). Each CP contains specific questions that may vary from country to country. The detailed list of CPs within each cluster is indicated in the table below. Compliance Clusters Compliance Points 1 Child Labour 1. Child Labourers 2. Unconditional Worst Forms 3. Hazardous Work 4. Documentation and Protection of Young Workers 2 Discrimination 5. Race and Origin 6. Religion and Political Opinion 7. Gender 8. Other Grounds 3 Forced Labour 9. Coercion 10. Bonded Labour 11. Forced Labour and Overtime 12. Prison Labour 4 Freedom of Association and 13. Union Operations Collective Bargaining 14. Freedom to Associate 15. Interference and Discrimination 16. Collective Bargaining 17. Strikes 5 Compensation 18. Minimum wages 19. Overtime wages 20. Premium Pay 20. Method of Payment 21. Wage Information, Use and Deduction 22. Paid Leave 23. Social Security and Other Benefits 6 Contracts and Human Resources 24. Employment Contracts 25. Contracting Procedures 26. Termination Page 10 of 27

27. Dialogue, Discipline and Disputes 7 Occupational Safety and Health 28. OSH Management Systems 29. Chemicals and Hazardous Substances 30. Worker Protection 31. Working Environment 32. Health Services and First Aid 33. Welfare Facilities 34. Worker Accommodation 35. Emergency Preparedness 8 Working Time 36. Regular Hours 37. Overtime 38. Leave Calculating Non-Compliance Better Work calculates non-compliance rates for each factory and reports these in individual factory reports. The non-compliance rate is reported for each subcategory, or compliance point, within a cluster. A compliance point is reported to be non-compliant if even one question within it is found in non-compliance. In public synthesis reports, Better Work calculates the average non-compliance rates for all participating factories in each of these same sub-categories. For example, an average noncompliance rate of 100% means that all participating factories were found to have a violation in that area. While it is a strict indicator, the non-compliance rate is useful for Better Work to aggregate and compare data across countries. However, this number is not sufficient to fully describe the specific issues that enterprise advisors have observed during their assessment. For this reason, tables presenting average non-compliance findings at the question level are also presented in Section II with the title of In Focus Tables. These tables, showing the number of factories found to be noncompliant to individual questions, allow the reader to fully appreciate the specific challenges in compliance identified in factory assessments. Note on the factories represented in this report Better Work compiles synthesis reports approximately every six months for each of its country programs. The synthesis report presents a snapshot of the non-compliance situation in the participating industry of the respective country. The rates presented in the synthesis report refer to participating industry averages. As factories are assessed once per year, in some cases the data included in the synthesis reports is older than six months. This synthesis report presents the aggregated findings of 19 factory assessments, including six factories that have been assessed for the first time and thirteen that have received two or more visits, between January 2013 and April 2014. Limitations in the assessment process Assessments carried out by Better Work Lesotho are based on a comprehensive set of questions (250 in total) that cover core labour standards and national labour law requirements (as mentioned above). Each factory assessment report is based on the analysis of observations, document review Page 11 of 27

and management and worker interviews carried out during the two assessment days. Interviews are conducted with workers individually and in groups, either in a private room within the factory building or outside the building (yard, canteen area). As all workers are Basotho, the interviews can be held in the national language, Sesotho. Factories are given seven days to review the report and comment on findings. Worker focus group discussions held in September 2013 confirmed the existence of issues that are difficult to detect during the assessment, including discrimination on the grounds of a person s perceived or real HIV status or gender-based discrimination in the form of sexual harassment. Both are very sensitive issues to talk about due to cultural perceptions and associated stigma. For example, workers may not want to share information on discrimination in relation to HIV/AIDS where it requires the disclosure of the worker s own status or that of co-workers. And in the case of sexual harassment victims may fear retaliation. Focus group discussions revealed that there is also hidden discrimination of workers based on union membership and of workers being pregnant. The program provides specific training to the Enterprise Advisers on how to find sensitive issues during worker interviews. In June 2013 and July 2014, they participated in an advanced training on how to discover and investigate discrimination and Freedom of Association-related noncompliances. Page 12 of 27

Section II: Findings Average Non-Compliance Rates Chart 1 provides an overview of average non-compliance rates for factories covered in this report with the number of factories in non-compliance with each CP in brackets. Key findings are provided below, followed by a section with additional details. In the areas of Core Labour Standards: Child Labour: No cases of child labour were detected. Discrimination: There was one non-compliance finding for gender-based Discrimination due to sexual harassment of female garment workers by their supervisor. Forced Labour: No findings were uncovered with respect to coercion, bonded labour, forced labour and overtime or prison labour. Freedom of Association: One factory had a non-compliance finding under this cluster where the management refused to meet with unions to discuss recognition issues and unions access to their members in the workplace. In the areas of Working Conditions (national law): Compensation: Most non-compliances in this cluster were detected under Wage Information, Use and Deduction as eight factories had more than one accurate wage record. Other non-compliances were identified for non-payment of sick leave, incorrect payment of wages on public holidays, a delay in paying wages and payment of wages below the legal minimum. Contracts and Human Resources: Seven factories had a non-compliance under Employment Contracts because workers did not understand terms and conditions of their contract. Six factories did not meet compliance requirements under Dialogue, Discipline and Disputes due to verbal harassment of workers by supervisors. Occupational Safety and Health: For three compliance points, including Emergency Preparedness, Health Services & First Aid and Worker Protection, the non-compliance rate reached 100%. Relatively high non-compliance was also identified for Working Environment, Welfare Facilities, Chemicals & Hazardous Substances and OSH Management Systems, with average NC rates ranging from 47% to 68%. Five factories were out of compliance with emergency preparedness under Worker Accommodation. Working Time: Under this cluster non-compliances were most frequent for issues relating to Regular Hours, including inaccurate working time records (which did not reflect the hours actually worked) and non- Page 13 of 27

provision of 2-days off for security guards. Non-compliances were also found for overtime exceeding the legal limit and non-provision of a one-hour breastfeeding break. Page 14 of 27

Chart 1: Average non-compliance rates Page 15 of 27

Detailed Findings This section describes the levels of non-compliance across participating factories for each Compliance Point within each of the eight categories of labour standards covered by the Better Work Lesotho assessments. The In Focus Tables provide detailed findings at the question level. 1. Core Labour Standards A. Child Labour Better Work Lesotho did not find any non-compliance findings in the Child Labour cluster. B. Discrimination There was one instance of Discrimination, where sexual harassment was detected in one factory. A male supervisor made unwanted verbal intimate advances to female workers on fixed-term contracts. When they declined these advances the supervisor threatened them that their contracts would not be renewed and their daily bonuses not paid. One female worker reported this case to the factory s HR unit but no action was taken. C. Forced Labour There were no Forced Labour findings in the reporting period. D. Freedom of Association and Collective Bargaining Better Work Lesotho found one instance of non-compliance in the Freedom of Association and Collective Bargaining cluster. One factory was found to not provide unions access to workers in the workplace. Union officials sent several written requests to the factory management to discuss union recognition and access issues (e.g. election and introduction of shop stewards, meeting facilities, deduction of union dues). The management did not respond to their requests. 2. Working Conditions E. Compensation The compliance point for Wage Information, Use and Deduction has the highest non-compliance rate within the cluster of 42%. Most findings were given for cases where the factory had more than one accurate wage record, an indication for double books. In Focus 1 Wage Information, Use and Deduction Question Number of factories out of compliance Does the employer keep only one accurate wage record? 7 Does the employer properly inform workers about wage payments and deductions? 2 Does the employer restrict workers' freedom to use their wages as they choose? 0 Has the employer made any unauthorized deductions from wages? 1 Page 16 of 27

The compliance point for Paid Leave has a non-compliance rate of 16%, with 3 factories that are out of compliance. One employer did not pay workers correctly during sick leave. Two other employers were reported to not pay workers their full wages for paid public holidays. The Method of Payment compliance point has an 11% non-compliance rate because wages in two factories were not being paid on time. However, all factories were found to be paying wages directly to workers. Within the compliance point for Minimum Wage, one factory did not pay at least the applicable minimum wage for ordinary hours of work to regular full time workers, who had less than 12 months of continuous service. The same factory also was found to not be paying at least the applicable minimum wage to someone who had more than 12 months of continuous service. F. Contracts and Human Resources Employment Contracts has a non-compliance rate of 37%. Better Work Lesotho assessments found that all persons who performed work for the factory, both on the premises and offsite, had a contract. Also, employment contracts in all factories were found to have specified the terms and conditions of employment and internal work rules complied with the law. In seven factories, workers did not understand the terms and conditions of employment. Dialogue, Discipline and Disputes has a non-compliance rate of 32%. Five factories were reported to have workers who had been bullied, harassed or subjected to humiliating treatment. Supervisors in these factories used disrespectful language in their communication with workers, mainly when pushing them to achieve their targets. In one factory, the disciplinary measures did not comply with the Codes of Good Practice (2003) 6. All factories resolved grievances and disputes in compliance with legal requirements. Better Work Lesotho assessments found no non-compliance findings under Contracting Procedures and Termination. G. Occupational Safety and Health Within this cluster, the highest rate of non-compliance (100%) was found under Emergency Preparedness, Health Services and First Aid and Worker Protection. In Focus 2 Emergency Preparedness Question Number of factories out of compliance Are emergency exits and escape routes clearly marked and posted in the workplace? 10 Are the emergency exits accessible, unobstructed and unlocked during working hours, including overtime? 9 Are there enough emergency exits? 1 Does the employer conduct periodic emergency drills? 6 Does the workplace have a fire alarm system? 1 Does the workplace have adequate fire-fighting equipment? 11 Has the employer trained an appropriate number of workers to use the fire-fighting equipment? 14 6 The Codes of Good Practice (2003) provide guidance on fair labour practices, including grievance handling, disciplinary measures and termination. Complementing the Labour Code 1992 and its amendments they constitute part of enforceable legal legislation. Page 17 of 27

Under Emergency Preparedness, most non-compliances were given for employers not having trained an appropriate number of workers in fire-fighting. The lack of training for 10% of the workforce is mainly due to cost implications. Findings were also frequent for inadequate fire-fighting equipment. Emergency exits and escape routes were faded, and thus not clearly marked. Some factories continued the practice to lock emergency exits during working hours to avoid theft. Assessments also revealed that emergency drills were often delayed and in some cases, did not cover the accommodation of factory personnel. In Focus 3 Health Services and First Aid Question Number of factories out of compliance Does the employer inform and educate workers on HIV/AIDS? 1 Does the employer provide for pre-assignment and annual medical checks for workers who handle hazardous chemicals? 8 Has the employer ensured that there are a sufficient number of readily accessible first aid boxes/supplies in the workplace? 4 Has the employer provided first-aid training for workers? 18 Assessments reveal that 18 factories analyzed in this report had not trained enough workers in first aid. A number of factories cite high training costs by external service providers as main reason for not having fully trained 10% of their workforce in first aid as yet. In some factories it takes one to two cycles for the training to be completed. Eight factories did not comply with legal requirements for pre-assignment and medical checks for workers handling chemicals. One reason for non-compliance is that properly functioning record keeping systems are not maintained to ensure timely follow up on medical check dates. And in some cases a pre-assignment medical check was delayed for workers who were transferred within their factory to start working as chemical handler. Except for one all factories informed and educated workers on HIV/AIDS a service provided by ALAFA until the end of March 2014. In Focus 4 Worker Protection Question Number of factories out of compliance Are all vessels under pressure properly maintained and operated by a competent person? 2 Are appropriate safety warnings posted in the workplace? 5 Are cranes and other lifting machines of good construction and well maintained? 0 Are electrical wires, switches and plugs properly installed, grounded, and maintained? 5 Are goods stacked in a manner that ensures their stability and prevents any fall or collapse? 4 Are materials, tools, switches, and controls within easy reach of workers? 0 Are proper guards installed and maintained on all dangerous moving parts of machines and equipment? 8 Are standing workers properly accommodated? 7 Are there sufficient measures in place to avoid heavy lifting by workers? 0 Are workers effectively trained and encouraged to use the personal protective equipment that is provided? 5 Are workers effectively trained to use machines and equipment safely? 6 Are workers punished if they remove themselves from work situations that they believe present an imminent and serious danger to life or health? 0 Do workers have suitable chairs? 0 Page 18 of 27

Does the employer provide workers with all necessary personal protective clothing and equipment? 18 The high non-compliance rate under Worker Protection was caused by the fact that 18 factories had one finding for not providing workers with all necessary personal protective clothing and equipment (PPC/E). Reasons for non-compliance include cost reduction and/or the lack of functioning PPC/E issuance systems to manage the timely replacement of protective equipment or clothing. In eight factories moving machine parts did not have proper guards installed and/or lacked maintenance. Most findings under this issue were due to non-functioning eye guards. Seven factories did not provide standing workers with a mat to stand on or a chair nearby to take rest in intervals. In Focus 5 Working Environment Question Number of factories out of compliance Are all passageways free from obstruction and floor openings fenced off and covered? 6 Are noise levels acceptable? 2 Is the temperature in the workplace acceptable? 5 Is the workplace adequately lit? 1 Is the workplace adequately ventilated? 9 Is the workplace overcrowded? 2 The compliance point for Working Environment has a non-compliance rate of 63%. In nine factories the workplace was not adequately ventilated during the summer months, an issue mainly due to a lack of functioning fans, barred windows and no systematic follow up to ensure air circulation. Six factories had obstructed passageways and floor openings that were not sufficiently covered, leading to a health hazard for workers, especially in case of an emergency. Also, in five factories the temperature in the workplace was not acceptable which affected workers well-being and productivity. Warehouse and packing tend to be particularly cold during winter, and a number of factories continued to face challenges in providing effective protection against low temperatures to workers in these areas. In Focus 6 Welfare Facilities Question Number of factories out of compliance Does the employer provide a place for workers to store clothing that they do not wear during work? 3 Does the employer provide workers enough free safe drinking water? 0 Does the workplace have adequate accessible toilets? 3 Does the workplace have adequate hand washing facilities and adequate soap? 5 Does the workplace have an adequate eating area? 1 Is the workplace clean and tidy? 9 While overall the number of detected non-compliances under Welfare Facilities remained fairly low, 50% of analyzed factories were given a finding for having an unclean and untidy workplace, mainly due to the lack of systematic cleaning and maintenance schedules. In five factories there was no soap in the toilet. Factories are often discouraged to provide soap as some workers tend to take it home. In Focus 7 Chemicals and Hazardous Substances Question Number of factories out of compliance Page 19 of 27

Are chemicals and hazardous substances properly labelled? 7 Are chemicals and hazardous substances properly stored? 6 Does the employer have material safety data sheets for the hazardous chemicals used in the workplace? 6 Does the employer keep a record of chemicals and hazardous substances used in the workplace? 2 Does the employer provide adequate washing facilities and cleansing materials in the event of exposure to hazardous chemicals? 4 Has the employer effectively trained workers who work with chemicals and hazardous substances? 2 Has the employer taken action to assess, monitor, prevent and limit workers' exposure to chemicals and hazardous substances? 2 Assessments recorded a 58% rate of non-compliance for the Chemicals and Hazardous Substances compliance point. Factories were mostly cited for non-compliance for not having properly labeled chemicals (seven factories), incorrect storage of chemicals (six factories) and non-availability of material safety data sheets (six factories). These factories lacked a systematic approach to chemical labeling and data management as well as sufficient know-how and procedures to ensure that chemicals are stored safely. In Focus 9 OSH Management Question Number of factories out of compliance Does the employer record work-related accidents and diseases? 2 Does the factory have a functioning safety and health committee? 3 Does the factory have a written OSH policy? 1 Does the safety and health officer carry out inspections of the workplace at least every 2 months? 5 Has the employer appointed a safety and health officer registered with the Chief Factory Inspector? 8 OSH Management had a non-compliance rate of 47%. While the non-compliance count under most issues remained low, still eight factories did not have a safety and health officer registered with the Chief Factory Inspector. Non-compliance under this question can be mainly explained with a lengthy OSH officer registration process, particularly if factories hire less experienced OSH personnel who still need to undergo training before they can sit the certification exam with the MoLE. Also, five factories did not carry out workplace inspections at least every 2 months. The 26% non-compliance rate for the compliance point for Worker Accommodation is due to five employers who had not adequately prepared for emergencies in the accommodation facilities (no emergency lights, no regular fire drills, no escape routes). H. Working Time Regular Hours has a non-compliance rate of 37%. In six factories, working time records did not reflect the hours actually worked. And in one factory the employer did not provide 2 days off per week for the security guard. Better Work Lesotho found a non-compliance rate of 21% for the compliance point for Overtime. In four factories, overtime exceeded 11 hours per week. Page 20 of 27

Two employers did not provide female workers one-hour breastfeeding breaks. The non-compliance rate for the Leave compliance point was 11%. Page 21 of 27

Section III: Changes in Compliance This section concerns the thirteen factories that have been assessed at least twice by Better Work Lesotho. Chart 2 presents the changes in compliance between the most recent assessment visit with its immediately previous visit. Among the thirteen factories that have been assessed more than once, 11 factories improved their average non-compliance rate. And two factories had a higher incidence of non-compliance findings in the period than in the previous one. Better Work defines compliance effort as the difference in non-compliance between two consecutive Better Work assessments. As such, positive percentages indicate improved performance and negative percentages indicate a decline in performance. A 0% compliance effort either means that under the respective compliance point no non-compliances were identified at all or that compliance performance remained unchanged. It is important to note that the data may not fully capture all improvements made at a factory as a CP would still be non-compliant, unless all issues identified under it have been addressed. Under the cluster for Discrimination, the compliance point for Gender sees a drop in the noncompliance rate of 4%. This is because Better Work Lesotho assessment found sexual harassment of workers in a workplace that previously did not have any. The factory has taken disciplinary measures against the perpetrator and sent its HR staff to BWL training on HR management and grievance mechanisms to increase their skills in handling cases of sexual harassment. Also, the factory s HR staff conducted training for supervisors on the nature of workplace sexual harassment to prevent the reoccurrence of new cases in the future. Within the cluster for Freedom of Association and Collective Bargaining, Freedom to Associate and Interference and Discrimination both improved 4%. In one additional factory, workers were found to be able to freely form a union. In this factory BWL advisory services focused on assisting the factory management in understanding better the work of shop stewards and in setting up regular communication structures with them. In a different factory, the employer no longer threatened, intimidated or harassed workers who joined a union or engaged in union activities. Under the Compensation cluster, there are positive changes in all compliance points. The largest improvement is seen in the compliance point for Overtime Wages (23%). The compliance points for Social Security and Other Benefits and Paid Leave both see improvements of 15%. Within Contracts and Human Resources, there has been an improvement of 31 percentage points for the compliance point for Dialogue, Discipline and Disputes. Employers in five additional factories were found to have resolved grievances and disputes in compliance with legal requirements. The number of factories where workers were bullied, harassed or subjected to humiliating treatment reduced from nine to five. The compliance point for Employment Contracts saw an improvement of 15%. Workers in two additional factories understood the terms and conditions of employment. BWL advisory services as well as training on HR management (including sessions on national labour law requirements and good HR practice) and supervisory skills helped to realize positive change under the Compensation and Contracts and Human Resources cluster. Supervisory skills training in particular and improved grievance handling procedures had an impact on the reduction of cases of verbal harassment, leading to less NC findings under Dialogue, Discipline and Disputes. Page 22 of 27

Within OSH, five out of eight compliance points saw an improvement in their non-compliance rates. There was no change in the non-compliance rates for Emergency Preparedness, Health Services and First Aid and Worker Protection. Welfare Facilities saw the largest improvement (38%) due to less non-compliance findings under the questions for adequate and accessible toilets, storage facilities for workers clothes and provision of hand wash facilities and soap. The non-compliance rate for Working Environment improved by 31%. The temperature in the workplace for 11 additional factories was found to be acceptable. Also, less non-compliance findings were counted for obstructed passageways and uncovered floor openings. Advisory visits and worker-management discussions during PICC meetings helped to bring about improvement under these topics. Under the Working Time cluster, Regular Hours saw an improvement of 31%. Four additional factories provided 1 day off per week for workers and 2 days off per week for security guards. And all employers were found to provide an hour-long break after 5 hours of work. Under the Leave compliance point, two additional employers provided female workers one hour as breastfeeding break. Page 23 of 27

Chart 2 : Compliance Effort Page 24 of 27

Conclusions and Next Steps The analysis of assessment findings for factories covered in this report shows that Occupational Safety and Health remains the cluster where non-compliances occur most frequently. As in last year s Synthesis Report, for selected compliance points (Emergency Preparedness, Health Services & First Aid, Worker Protection) non-compliance rates again reached 100%. For all other areas under OSH the compliance effort was positive, indicating that factories have begun to address OSH non-compliances successfully and that BWL capacity building measures and PICC work have had an impact. Nevertheless, given persisting high non-compliance in selected OSH areas BWL s advisory and training services will continue to focus on assisting factories in improving their OSH conditions further. Interventions include: Firefighting and fire safety in-house training: This training aims to build factories in-house capacity to train their workforce in firefighting and on fire safety. The concept consists of three stages: (i) a foundation training for OSH personnel on firefighting and fire safety, conducted by an accredited service provider, (ii) a Training-of-Trainer course to build participants skills in facilitating training to workers, and (iii) coaching of factory trainers in developing in-house training plans, keeping training records and conducting training. Other OSH training: The current training product portfolio comprises of a 2-day foundation training covering OSH key areas (including worker protection, machine safety, chemical safety), a 2-day training on OSH for PICC and OSH committee members, Housekeeping and Risk Assessment. Industry Seminars on OSH: Industry Seminars reach out to PICC members and other factory staff from different factories. Topics offered by BWL include Chemical Safety Management and Fire Safety. Health & Safety Management Systems development: The program is piloting advisory and training measures to build factories capacity to establish health & safety management systems and improve already existing structures. Advisory visits and PICC meetings: Depending on a factory s specific needs, Enterprise Advisors work with PICC members on OSH improvements through PICC internal training sessions, OSH observation tours and the dissemination of good practice and guidance sheets. Also, while non-compliances under OSH Management Systems did decline, close to 45% of factories covered in this report do not have a qualified OSH Officer who has obtained a certification by the MoLE which is a requirement as per law. The program contributes to the revision of the OSH officer registration process currently underway with the aim to make it easier for factories to get their OSH officers trained and pass the certification exam. The HR and Contracts cluster shows encouraging improvement under Dialogue, Discipline and Disputes where factories had been successful in reducing the number of cases where workers had been verbally harassed by supervisors. Better Work Lesotho is offering supervisory skills training since 2012 which has proven to be a valuable tool in changing supervisors behavior towards adopting more professional leadership skills. 60% of factories that continued to have a non-compliance for disrespectful treatment of workers by their supervisors did not participate in the program s supervisory skills training as yet. Under the Better Work supervisory skills initiative, implemented in all Better Work country programmes, BWL is focusing on training both Basotho and Chinese supervisors, with training offered in Sesotho, English and Mandarin. The initiative also includes ToT courses to build factories in-house training capacity on effective and fair supervision techniques, training of female workers to become supervisors and the development of a supervisor network to assist already trained supervisors to improve their skills further. Page 25 of 27