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Stakeholder engagement in the supply chain: The value of hotlines

This system analysed below is by no means perfect.

But it shows the (potential?) value of creating simple stakeholder engagement tools which can have an impact, and use the power of the ‘market’ to sustain change.

It’s a short piece, and worth a read. It’s from the latest edition of Ethical Corporation magazine.

Yes, it uses an audit-based remediation system. But audits will not go away, flawed as they are. This mix of engagement and ‘stick’ is an interesting move beyond just audits, and may help factory owners run better businesses, which is surely the aim here.

Factory compliance – Toying with worker rights

China’s toy factories have long been dogged with labour abuse problems. A helpline service is now helping workers speak out and get heard

China’s toy factories have long been dogged with labour abuse problems. A helpline service is now helping workers speak out and get heard

China’s 8,000 toy factories are gearing up for high season. At the offices of the International Council of Toy Industries’ Caring, Awareness, Responsible, Ethical programme (known as ICTI Care), the phone calls are coming in: reports of late payment, difficulties with getting leave approved, queries about overtime rules, and so forth.

Fielding the calls is a specialist team of social workers and labour rights experts. All the calls are recorded, advice is shared and remedial action, where appropriate, is taken.

The whistle-blowing scheme is part of an education programme launched by ICTI Care to make workers in Chinese toy factories aware of their rights. Central to the initiative is a confidential employee hotline. The service is available to all the 1.4 million workers in the 2,400 factories signed up with ICTI Care.

Set up two years ago, the hotline is proving to be an “effective mechanism” for highlighting non-compliance issues, says Christian Ewert, chief executive of the ICTI Care Foundation.

“If something is not going on as it should be, [workers] can reach us … and speak to someone with an open ear,” he insists.

Buyer assurance

It’s not only workers that stand to benefit, according to Ewert. Having a complaints hotline in place gives an extra level of assurance to buyers. It also serves as an early alarm system for factory owners, enabling them to identify problems and resolve disputes before they get “out of proportion”.

It’s difficult to find fault with the theory of a worker helpline. In practice, however, two key conditions need to be in place for it to work.

First, workers need to know their rights and then feel confident enough to call. In terms of the former, ICTI has issued more than 800,000 pocket-sized cards with the number of the hotline on one side and workers’ ten basic rights on the other. As for worker confidence, callers have the option of remaining anonymous.

Second, the system needs to produce results. If workers call and nothing happens, confidence in the system falls apart. Critics, such as Hong Kong-based labour campaign group Students & Scholars Against Corporate Misbehaviour (Sacom), point out that fewer than one in 10 calls have resulted in formal investigations. “Not to mention whether they [the investigations] were successfully handled,” adds Sacom project officer Debby Chan.

Ewert insists, however, that the system is robust. About 250 calls are received a month. Many comprise requests for counselling and advice, he says. Only about 15% of calls represent genuine violations of factory labour codes. All of these are followed up with factory management. ICTI Care gives factory owners 30 days to come back with a response. For serious offences, participating factories are then put on a probationary notice for one year. During that time, the factory will undergo four extensive audits and will need to prove a systemic change in practice.

What’s the stick? Ultimately, ICTI Care can throw a factory out of its programme. It does so “as rarely as possible”. Once a factory is excluded, Ewert acknowledges, ICTI’s leverage to influence it is removed entirely.

Arguably, the market provides the most compelling case to comply. Wal-Mart, for instance, will only buy toys from ICTI-certified factories. Many other foreign retailers have the same policy.

ICTI-compliant factories now supply three-quarters of all China’s toy exports. As long as foreign consumers continue to demand better working conditions, workers in these factories will be heard. The real challenge lies in the factories supplying China’s domestic market. Workers there can call as much as they like, but there’s no one to listen.

There’s a lot more of this sort of analysis here
. Enjoy.

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