Irvine Consultant Works with Disney, Others on Global Labor Standards
Gertie Knox has traveled the world over, but she’s no leisurely tourist.
As an Irvine-based partner with PricewaterhouseCoopers LLP’s Global Contractor Compliance practice, Knox works with companies to set and meet global compliance standards for factories they contract with. She regularly visits plants in China, Central America, Africa and India.
With sweatshop labor a hot-button issue among consumers and activists, Knox focuses on developing codes of conduct for companies to follow in selecting production sites. She also coordinates teams that perform on-site monitoring at contract manufacturers around the world.
PricewaterhouseCoopers’ Global Contractor Compliance practice, which is based out of Los Angeles, performs 6,000 monitoring visits per year, many of which involve companies in the apparel sector. Her clients include Burbank-based Walt Disney Co. Knox recently discussed her work with the Business Journal’s Chris Cziborr.
What are the current trends with global labor compliance?
Two big issues have been labor compensation and working hours. These issues have been very difficult for suppliers and customers to balance. They’re tackling all matters on the books, especially making certain people are being paid above minimum wage as required by the local laws, and that people are getting paid for all working hours, including overtime.
With compliance, we’re seeing that the whole process is made easier by educating the suppliers as to what the expectations are. What we may think of as just a baseline manufacturing or control element is not necessarily something suppliers have even thought about in their immediate environment.
So, a lot of times, no one thinks to educate first and then start to assess secondly,you can get a lot more for your efforts from both parties if you do this. Then, the whole process of compliance becomes a much more streamlined, effective and meaningful activity.
Trends are generally driven by the community at large,the multinational corporations, the activists and such,how they’re coming together and collaborating on matters, and on what sort of discussions, activities and dialogues are going on.
At the moment, you have numerous manufacturers and suppliers around the world trying to comply with as many individual customer codes of conduct as they have products on shelves. Suppliers are finding it challenging to be efficient and cost-effective in complying with, for example, 10 individual customer codes of conduct that they may be sourcing through.
What are the concerns of companies that contract with plants?
From the customer’s side, we’re seeing concerns that if they try to enforce compliance standards in countries where there’s a lack of enforcement, they often carry very little leverage because of the amount of production sourced at a particular factory.
In these cases, they are very interested in collaborating with other multinationals that source out of the same facility. They want to have joint efforts take place as opposed to all these individualized efforts that have been going on for the past three years now.
Both suppliers and customers are figuring out how to come together to simplify the whole compliance matrix.
Who participates in monitoring activities?
Monitoring organizations include a few non-governmental organizations acting in a monitoring capacity, but most of them are independent third-party organizations hired by multinational corporations.
The pressures come mainly from activist and consumer groups.
How are standards for social compliance set?
Standards are set individually by multinationals within industry programs where they’re attempting to have collaborative meetings. In that sense, they come together as a collective unit to establish consistent standards.
Standards rely mainly on local laws and conditions. The challenge for multinationals is to link to something that has a source of authority beyond a purchase order, although purchase orders themselves can also carry power.
When you go in and link to a local law, you take away the temptation of some critics to say, “You’re trying to apply a Western or European standard to the rest of the world.” You should always have Western or European multinationals looking at local laws.
What country has posed the biggest challenge in terms of labor compliance?
Everyone likes to use the People’s Republic of China as a poster child. When you say “difficult” and “a challenge,” that is the country that first comes to mind. One of the main reasons is sheer volume of activity,the country is a large source of production for all parts of the world.
While there are laws on the books that are very detailed and comprehensive, the Chinese government provides a very low level of enforcement. Consequently, customers that choose to source there have a very difficult decision to make, because of issues surrounding working hours and compensation, especially for overtime.
Those are challenges that continue to exist in China today, notwithstanding all the monitoring efforts that have been put in over the last four years.
China also makes it unlawful for its citizens to associate with or join any labor unions other than the labor union run by the Communist Party.
What about Mexico?
Working hours are again a problem area, because the country is another huge source of global production. Mexico also has issues related to compensation, not to the same degree that we see in China. But it’s still worse than it should be.
Mexico has a very liberal maternity leave protection program. Consequently, a lot of factories there find it burdensome and costly for them to comply with the rules of the law. So, a number of factories have attempted to identify those workers that might be pregnant while attempting to screen applicants.
They don’t want current workers to become pregnant unless management is aware of it. They attempt to terminate or get rid of those employees so that they don’t have to bear the cost of maternity benefits that the law provides for those females. It’s not against Mexican law, but it’s distinctly contrary to what the standards are that have been adopted by multinationals.
A lot of Mexican factories are actually testing females to see if they’re pregnant. If factory management finds this to be the case then they arbitrarily dismiss these women. This has been a major challenge for multinationals over the years, and they continue to struggle with this in Mexico. n
