Proceedings of the Standing Senate Committee on
Human Rights
Issue 19 - Evidence - June 15, 2015
OTTAWA, Monday, June 15, 2015
The Standing Senate Committee on Human Rights met this day at 4:01 p.m. to monitor issues relating to human rights and, inter alia, to review the machinery of government dealing with Canada's international and national human rights obligations (topic: Corporate Social Responsibility (CSR) and garment workers).
Senator Mobina S. B. Jaffer (Chair) in the chair.
[English]
The Chair: Honourable senators, welcome to the thirty-sixth meeting of the Standing Senate Committee on Human Rights during the Second Session of the Forty-first Parliament.
[Translation]
The Senate gave our committee the mandate to study issues pertaining to human rights both in Canada and abroad.
[English]
My name is Mobina Jaffer. I'm from British Columbia and am the chair of the committee. I will now ask the rest of the members of the committee to introduce themselves. I will start with the deputy chair.
Senator Ataullahjan: Senator Salma Ataullahjan from Toronto, Ontario.
Senator Eaton: Nicky Eaton, Ontario.
Senator Andreychuk: Raynell Andreychuk, Saskatchewan.
Senator Enverga: Tobias Enverga, Ontario.
Senator Nancy Ruth: Nancy Ruth, Ontario.
Senator Hubley: Elizabeth Hubley, Prince Edward Island.
The Chair: Thank you.
Garment manufacturing is an important source of jobs in the developing world. The great flexibility and decentralization of that industry, together with its generalized recourse to subcontracting, complicate the implementation of adequate health and safety standards.
[Translation]
In many garment exporting countries, such as Bangladesh, India and Vietnam, thousands of workers are exposed to dangerous working conditions and other risks to their health and safety.
[English]
On April 24, 2013, Rana Plaza, an eight-storey building containing five garment factories, located on the outskirts of the capital of Bangladesh, collapsed killing approximately 1,127 workers and injuring thousands. This was the worst of a series of fatal accidents that took place in the garment-manufacturing industry in Bangladesh. Among those, there were also the November 2012 fire where over 100 people were killed and the fire in October 2013 where there were seven dead and 50 injured.
[Translation]
The private sector has human rights obligations, including in workplaces. Employees from numerous communities around the world have won the right to work in healthy and safe working conditions, earn a living wage and have reasonable working hours.
[English]
When workers' health and safety are not protected, when wages do not allow for a reasonable standard of living and when workers are intimated for trying to unionize, a number of rights recognized in the international human rights convention to which Bangladesh is a party are engaged. Unfortunately, although Bangladesh has ratified a number of international human rights conventions, such as the ILO Labour Inspection Convention in 1972, the Rana Plaza collapse and other similar events demonstrate that there is significant room for improvement in implementation and that effective enforcement is still required.
We have a number of panels this afternoon to look at the issue of the garment industry and corporate social responsibility. To begin with, we have, from Gildan Activewear Inc., Peter Iliopoulos, Senior Vice-President, Public and Corporate Affairs; and, appearing via video conference from Loblaw Companies Limited, Robert Chant, Senior Vice President, Corporate Affairs and Communications.
We will start with Mr. Iliopoulos.
Peter Iliopoulos, Senior Vice-President, Public and Corporate Affairs, Head Office, Gildan Activewear Inc.: Thank you, Madam Chair. Let me begin by expressing my gratitude for allowing me to appear today. We have tremendous respect for the work of your committee, and we are particularly excited to contribute to your examination on the rights of garment workers and corporate social responsibility.
[Translation]
I am the Senior Vice-President of Public and Corporate Affairs at Gildan.
[English]
I would like to start by giving you a brief overview of Gildan's operations. We are a vertically integrated apparel manufacturer with our manufacturing hubs located in Central America and the Caribbean basin. In 2010, we acquired a vertically integrated manufacturing facility in Bangladesh. As part of our vertical integration, we also conduct yarn-spinning operations in the United States. We employ approximately 42,000 people. We pride ourselves on our ability to deliver a high-value, quality product to our customers, leveraged against our leading social and environmental practices and Canadian corporate governance profile.
We service our product into two primary markets. We sell T-shirts, sports shirts and fleece in the wholesale distribution channel where we currently have the largest market share in Canada and the United States. We have also expanded our product line to include socks, hosiery and underwear in order to provide a full product line offering in the retail channel in addition to our activewear product line.
With respect to our operations in Honduras, which represent the most significant piece of our overall manufacturing production, we operate four textile manufacturing facilities, two integrated sock manufacturing facilities and four sewing facilities, which are responsible for producing our activewear and underwear products. In total, this represents a capital investment of approximately $500 million in the last five years alone. We have over 26,000 employees in the country.
Our vertically integrated manufacturing facility in Bangladesh employs over 2,000 people and represents a very small portion of our overall production capacity. Since our acquisition of this facility in 2010, we have invested over $1 million in building enhancements, the installation of a waste water treatment plant and an upgrade of equipment. The purpose of this facility is to service our business in Europe and Asia.
Our corporate social responsibility program, the Gildan Genuine Stewardship commitment, is based on four core pillars: people, community, environment and product. CSR represents a key component of our overall business strategy, and we believe our practices position us as a leader in the industry.
Our social compliance program includes a strict code of conduct based on internationally recognized standards and encompasses a thorough audit process that includes the conducting of both independent and third-party audits at each of our facilities on a regular basis. Our labour compliance program has been accredited by the Fair Labor Association since 2007. In fact, Gildan was the first vertically integrated apparel manufacturer to be accredited by the FLA.
In addition, each of our sewing facilities has been certified by the Worldwide Responsible Accredited Production program. Since 2009, Gildan has been annually recognized by Jantzi-Macleans as one of Canada's 50 best corporate citizens. Gildan is also the only North American company in the textiles, apparel and luxury goods industry to be listed on the Dow Jones Sustainability World Index, which is among the most prestigious benchmarks for corporate sustainability worldwide.
The working conditions we offer our employees at our worldwide locations include competitive compensation that is significantly above the industry minimum wage, 24-hour access to on-site medical clinics staffed with 27 doctors and 55 nurses, free transportation to and from work, and subsidized meals. We are currently in the process of implementing a best-in-class ergonomics program in collaboration with the Ergonomics Center of North Carolina, which we expect to first complete in Honduras and subsequently at each of our other locations.
We have also inaugurated three schools for back health in Honduras. Most recently, we have developed a school for shoulder health at one of our sewing facilities in Honduras.
To better integrate our production processes and corporate social responsibility practices in Bangladesh, we have leveraged our more than 10 years of experience in Honduras and sent a team of skilled managers in order to train the local management team and help them integrate the Gildan standard.
Among the many safety measures implemented in Bangladesh since the acquisition are the reinforcement of the building structure following the recommendations of an independent, U.S.-based engineering firm, annual audits by third-party safety and loss-prevention specialists, external fire escapes, and regular inspections and fire drills. The facility has an emergency response brigade team comprised of 240 employees. One recent fire drill at our facility resulted in the successful evacuation of four floors of employees in a span of six minutes.
In 2014 alone, over 1,700 hours were spent on training related to health and safety. In July 2014, our facility in Bangladesh also underwent a structural, electrical and fire-safety inspection by the Accord on Fire and Building Safety in Bangladesh program.
Overall, the working conditions we offer our employees, which represent our greatest asset and success factor, are of paramount importance to us.
This has been a brief summary of Gildan and our CSR practices.
I would like to conclude by addressing the role Canada can play going forward, in particular with the 2013 Rana Plaza tragedy in Bangladesh. First, we believe Canada can play a leading role in corporate social responsibility by establishing mechanisms to ensure that all products entering the commerce of Canada originate from manufacturers that adhere to internationally recognized labour standards and health and safety practices in working conditions. In fact, Canada has previously included labour standards in free trade agreements.
Specifically, we ask that the Canadian government reconsider the provision of duty-free access from Bangladesh under the Least Developed Country Tariff, the LDCT, as a means of pressuring manufacturers in Bangladesh to improve safety standards in the country to an acceptable level and to ensure that the country is in full compliance with internationally recognized labour standards.
Take into consideration that Bangladesh is the second-largest exporter of apparel to Canada after China and remains by far the largest LDCT beneficiary with annual imports into Canada in excess of $1 billion. Furthermore, Bangladesh is the fourth-largest supplier of apparel by volume to the U.S., despite the fact that unlike in Canada, they do not benefit from duty-free access to the U.S. The United States has also recently suspended Bangladesh from its GSP program for its poor track record with respect to labour practices. In addition, local manufacturers benefit from government export subsidies relating to power costs and yarn purchases.
All of the data supports the hypothesis that Bangladesh is the lowest-cost global supplier of apparel, and the imposition of strong labour and safety standards will not hurt the competitiveness of the country as they can still compete effectively without tariff concessions.
In closing, I would like to thank the committee for this invitation, and I look forward to your questions.
The Chair: Thank you for your presentation. I would also like to recognize that you have always been open to working with us, and I appreciate it.
We are now going to hear from Robert Chant.
Robert Chant, Senior Vice President, Corporate Affairs and Communications, Loblaw Companies Limited: Madam Chair and committee members, thank you for the opportunity to appear here today and to update the committee and Canadians on the ongoing progress we are making in improving sourcing standards for the apparel industry in developing economies. The Rana Plaza collapse in Bangladesh on April 24, 2013, was a tragic event that deeply shook us and the global garment industry as a whole.
Reports say there were 28 global apparel brands producing in Rana Plaza. On behalf of our entire Loblaw organization, I want to once again extend our thoughts and prayers to the victims and families who lost loved ones in the building complex and to those injured who continue to recover.
I want to once again acknowledge and thank the Canadian government, former high commissioner Heather Cruden and the officials at the Department of Foreign Affairs, Trade and Development for all the work they have done and for their continued support of relief efforts.
The tragedy in Bangladesh launched a global conversation on building and safety standards in apparel factories and the ethical sourcing obligation of companies that do business with these vendors and factories. While we have been widely acknowledged as a leading voice in this conversation, we understand that actions speak louder than words. Today, I want to outline the actions Loblaw has taken to date.
Two years ago in the wake of the collapse, Loblaw's executive chairman and president, Galen Weston, committed Loblaw to strong action — a course of action rooted in the belief that the garment industry with well-built, safe buildings could indeed be a force for good.
Loblaw's immediate commitments after the tragedy were to help bring about improvements in vendor building standards and audits, to place Canadians on the ground to oversee vendors, to support community projects and provide short-term and long-term compensation to the victims and their families.
These continue to be our commitments, and we are making meaningful progress in fulfilling them. We believed then, as we do today, that we could do more good by sourcing products from Bangladesh than by exiting and choosing to source from other countries, as some companies have done in the wake of the collapse.
Let me start by addressing the improvements in vendor building standards and audits. Loblaw was one of the earliest signatories of the Accord on Fire and Building Safety in Bangladesh and the only Canadian company to do so for many months. Now one more Canadian company has signed the accord, and there are over 200 signatories internationally.
This legally binding five-year agreement is a comprehensive initiative to improve working conditions in the Bangladeshi garment industry. It includes independent safety inspections at factories and provides transparency and accountability with public reporting results, which are posted online and released to international media. When safety issues are identified, vendors have to commit to addressing the deficiencies while helping ensure the factory workers are paid their salaries, thereby protecting workers from income interruption.
Loblaw has completed audits of all the factories that our approved vendors use in Bangladesh. We have removed those that did not meet standards from our approved vendor list, and we continue to support those who did or those who have undertaken the necessary remedial actions that we identified through those audits. To date, close to 1,500 factories have been inspected in Bangladesh pursuant to the accord. As of May 20, 2015, remediated factories are coming back online and are being put back into production. Loblaw continues to be committed to the accord.
We've also extended building, fire and safety assessments to factories that our approved vendors used in Thailand, Cambodia, Sri Lanka, Vietnam and India.
New and current factories are only approved for use by a vendor once an audit is complete, and not before. If a vendor's factory does not pass the audit, then the vendor is given an opportunity to comply, failing which the vendor may not use that factory to supply Loblaw.
One issue identified in carrying out the audit process is the need for improved fire and safety training at the factory level for managers and employees. Loblaw now funds this training wherever audits identify a need. We continue to monitor and evaluate all of our offshore suppliers using the internationally recognized Workplace Conditions Assessment and our own supplier code of conduct. At every port of origin where Loblaw procures goods outside of Canada and the U.S., our global logistics provider checks the supplier's name and factory against the Loblaw list of approved suppliers.
One of challenges in global sourcing is ensuring that these standards are continually met and maintained. As such, we committed in 2013 to having Canadian boots on the ground to ensure we are connected to what is happening in these countries. Loblaw's supply chain has formed a compliance team to work on the ground in the regions where much of the production of our international vendors occurs. These are regions such as Vietnam, Cambodia and Bangladesh.
Under the direction of our senior director of supply chain located in Hong Kong, China, we have placed six managers on the ground in the region, and we are supplementing those six with additional production compliance team of 20 personnel — a total of 26 employees on the ground in the region.
Aklima Nipa, the manager of Loblaw offshore compliance in Bangladesh, explains:
I work with local factories in Bangladesh once their building fire and safety assessments are completed. I review the findings and help ensure that remediation plans are compliant.
Having people like Aklima on the ground provides Loblaw with greater oversight of the vendors and the factories they use. It allows us to respond to concerns with greater local knowledge and speed, and to help ensure that every product brought into a Loblaw store is produced in a manner that reflects Canadian values.
The impact of all these initiatives for customers is that only products from approved vendors using approved factories that have been audited make their way into our stores. Dealing with building and safety matters is a very important part of that progress, but we can't lose sight of the human impact of the collapse. That's why we have implemented meaningful support and compensation at the community level.
Loblaw has committed to getting those injured and affected back to work and back to their communities. We have partnered with two local organizations to provide these services on the ground. Through our THRIVE Project, Loblaw partnered with Save the Children Bangladesh to address critical health care issues and to provide peer counselling and education and child protection. Through our REVIVE Project, Loblaw has partnered with the Centre for the Rehabilitation of the Paralysed in Savar to assist victims and their families to obtain the medical help and assistance needed to reintegrate into the community.
Loblaw also continues to deliver on its commitment to provide short- and long-term compensation for victims and their families. Loblaw has voluntarily provided direct financial assistance to survivors and families through our contribution to the trust fund for long-term compensation, which was established by the International Labour Organization.
Last week, the ILO announced that we have reached the target set of $30 million raised, and to date approximately $10 million has been allocated to the almost 3,000 impacted individuals and families.
In addition to a voluntary financial commitment to the trust fund, Loblaw plays a leadership role in the fund by serving as one of four representatives of the international brand community.
Madam Chair, as you can see, Loblaw continues to be committed to ethical sourcing and to keeping apparel production in the region. In countries like Bangladesh, the garment industry provides unprecedented opportunities for economic empowerment, particularly for women. Of the more than 4 million Bangladeshi garment workers, more than 80 per cent are women, and as Heather Cruden, the former high commissioner to Bangladesh said, this large and growing sector is critical to Bangladesh's economy and is responsible for significant increases in women's employment and economic empowerment in the country.
When Rana Plaza collapsed in April of 2013, Loblaw took immediate action to assist with relief efforts and evaluate our commitment to ethical sourcing in the region. To date, we've done the following: We've provided $5 million to relief efforts in Bangladesh; we have partnered with NGOs to carry out the THRIVE and REVIVE projects; we've taken measurable steps to help improve building and safety standards in the factories producing products that supply our stores; we have remained committed to the accord and the work it does; we have audited all of our offshore vendors and the factories used to manufacture and supply product to us; and where the vendor and/or the factory does not pass the audit, we either discontinue immediately or allow them to update their facilities as required.
We have extended our commitment to offshore vendors and factories in other developing countries as well from which we source product. We have put boots on the ground and established Canadian compliance teams in countries where we our vendors manufacture and source product in order to assist with our goal of ensuring that garments are produced in a way that reflects Canadian values. Long-term change in the garment industry requires the ongoing and active participation of all who operate in the region through individual actions and broader industry commitments.
We remain committed to such long-term change and appreciate the role that it can play as an agent for such change.
Thank you for your time today and for inviting us to speak with you.
The Chair: Thank you very much, Mr. Chant. We will now go on to questions.
I have a question for you, Mr. Chant. I commend Loblaw's leadership role when the building collapsed, and if I'm not mistaken, I think you were the first to really take a stand.
You spoke about $10 million being disbursed of the $30 million, but we understand there are still a lot of people who have not been compensated. Can you tell us what's going on and why, after all these years, they are still not compensated?
Mr. Chant: As disappointing as it is, it has taken this long to reach the agreed upon target, and when I say "agreed upon,'' it was agreed upon by international labour organizations, local labour groups in Bangladesh, the Government of Bangladesh, the on-the-ground industry and the brands to raise $30 million. More than a year ago, Loblaw committed $3.5 million to this fund, which as a percentage of the total was significantly more than our share, I suppose, if you want to put it that way, of the total lead-in. It was not until last week, in fact, through an anonymous donor, that our target was reached.
The fund, overseen by the International Labour Organization, provided funds for victims as the money has flowed in, but it did not have money to provide until the money actually arrived. Not all of it has arrived. The $30 million is in the form of actual cash payments, and our commitment was fulfilled over a year ago. Not all of the $30 million has arrived in the bank, so to speak, but we are very confident that the full amount will flow very shortly.
The Chair: Do you have any idea how many people have been compensated and how many are waiting?
Mr. Chant: I honestly don't have the actual number of those compensated. I think that the full 3,000 that have been identified have received partial payment, but I don't want to say that in absolute terms. That's my understanding. As I mentioned, the total amount flowed to date is approximately US$10 million of the $30 million.
The Chair: Mr. Iliopoulos, in your opening remarks you stated that you pay above industry minimum, which I was very pleased to hear. I have two questions on that. Is the minimum wage sufficient to have employees meet basic needs like food and shelter?
Mr. Iliopoulos: When you look at the compensation package we offer our employees, the wage compensation is only one element of what we do for our employees. We pay wages significantly above minimum wage, but over and above that, recognizing the needs of individuals in the country, we offer a variety of other benefits to these employees, including subsidized meals, transportation to and from work, and full access to medical clinics we have set up at each our facilities, which are staffed with doctors and nurses to deal with not just whatever injuries may occur but also general health care and helping prenatal care as well.
We offer financing for education for our employees and continuous training. We look at it as a global piece when we look at the total benefits we offer our employees in terms of providing them with the things necessary to fulfill their basic needs.
The Chair: As you know, we have been hearing from a number of witnesses on this issue, and if I am not mistaken, a witness last week said your operations in Haiti do not respect minimum wages. Can you comment on that?
Mr. Iliopoulos: First, one clarification: We do not have manufacturing operations in Haiti. We work through third-party contractors. There has been a lot of debate over the last couple of years about the interpretation of the minimum wage legislation in Haiti. The labour code in Haiti that addresses minimum wage makes reference to a payment both of 200 gourdes per day in an eight-hour work day and 300 gourdes per day in an eight-hour work day. We took a proactive approach back in November of 2013, and we obligated the third-party contractors that we are dealing with in Haiti to respect the higher threshold, the payment of 300 gourdes per day in an eight-hour workday. We followed that up. It is tied to a piece rate, so essentially it's based on reasonable efficiency levels. We worked collaboratively with the primary apparel unions in the country to establish a reasonable efficiency rate that was acceptable to all parties, which we agreed to.
Then, essentially, we requested that each of our contractors operating in Haiti respect this piece rate payment to reach the 300 gourdes per day. We followed that up with independent audits to ensure that the compliance is there, and in fact we took it one step further, where, essentially, for one of our contractors, we facilitated the signing of an agreement between the contractor facility and the unions to respect the payment of the 300 gourdes per day, the piece rate that we agreed upon with the unions. We are now working with the other contractor to do the same and will continue ongoing audit compliance to ensure that the contractors are respecting the piece rate that we agreed upon with the unions.
The Chair: We will now go on to the deputy chair of the committee.
Senator Ataullahjan: Thank you, both of you, for your presentations. My question is to both of you. Last year, Syed Sajjadur Rahman, who is a professor at the School of International Development and Global Studies at the University of Ottawa, stated that for foreign buyers, the major concern is getting the product at the lowest cost possible. If Bangladesh cannot supply it, they will get it elsewhere.
If Bangladesh were to implement higher standards and fair working conditions, resulting in higher cost, would your companies still be prepared to keep the factories in the country, even if other countries were cheaper?
Mr. Iliopoulos: From our perspective, as a vertically integrated manufacturer, like in Bangladesh, we actually don't deal with third-party contractors. We have our own facilities on the ground in Bangladesh. We've taken a very proactive approach, and the view we take, in no matter what country we operate in, be it in Honduras or the Dominican Republic or Bangladesh, is exporting Canadian values to the countries in which we operate. So the working conditions and the benefits that I outlined in my opening remarks we apply consistently, whether that's in Bangladesh, Honduras or the Dominican Republic, irrespective of the country in which we operate. As I mentioned, CSR, for us, is a critical component of the overall business strategy of the company, and we would never compromise in that respect in terms of the production and manufacture of our products. From our perspective, this will always be a critical component of the operations of the company and our overall business strategy.
Mr. Chant: Deputy chair, it's nice to chat with you again. I think you are aware that immediately after the collapse of Rana Plaza we made the decision that we are committed to remaining in Bangladesh, remaining in the form of sourcing from Bangladesh. We do not own our own factories in the country. However, it became very clear to us very quickly that probably the worst thing we could do would be to stop sourcing from that country. The impact would be significant, particularly if the entire garment industry were to collapse as a result of decisions taken by multiple companies. That would be disastrous.
In fact, during my visit there, several weeks after April 24, it was, over and over again, made abundantly clear to me that everyone we spoke to, from the highest offices of government to local vendors, local factory owners and local workers, wanted us to remain, so we made that commitment. We further signed the Accord on Fire and Building Safety in Bangladesh, which is a five-year accord. It is not a one-month accord or a one-year accord. It's long-term commitment, and that requires us to maintain the same volumes in the country as we had at the time of the tragedy.
Of course, we require all of our vendors and all of the factories that produce product for us to live by our supplier code of conduct, which we think is a very robust and contemporary code. It reflects, we believe, the appropriate high level of respect for labour and human rights, and, of course, we would expect all of our vendors to live by that, including the references to abiding by local labour laws.
I suppose I could say that within reason, if there were significant changes that made a particular region or particular country or particular vendor not competitive with other jurisdictions or other competitors, that would be taken into consideration, but our commitment is to continue to source from Bangladesh.
Senator Ataullahjan: Thank you, Mr. Chant. It's nice to chat with you again.
I commend Loblaw on being active on this issue and providing compensation to the victims, and I also thank you for your support of the over 3 million female workers.
As to the issue of subcontracting, do you do any kind of subcontracting? We've heard that that's where the big issues are.
Mr. Chant: We understand that's where the big issues are as well. We allow subcontracting only on an authorized basis. If a vendor or a factory requires going to another factory for subcontracting purposes, that subcontracting factory would have to be one of our approved and audited factories. It would be treated like any other factory that we have in our list of approved factories. We have zero tolerance for unauthorized subcontracting.
Senator Eaton: Thank you both. It's a very interesting subject. What has the reaction of the Bangladeshi government been to you, Mr. Iliopoulos? Because you have a very high standard of corporate social responsibility, obviously. You are still very competitive. You, Mr. Chant, do it another way; you subcontract. Has the Bangladeshi government come back to Loblaw and said, "Yes, and what do you recommend? We are very supportive of the changes you are trying to bring?'' Did they hold Gildan research up as a model, for instance?
Mr. Iliopoulos: From our perspective, as I mentioned, how we try to run our business model is exporting Canadian values, regardless of the country in which we operate. We view what we are trying to do in the country, be it in Honduras or in Bangladesh, notwithstanding wherever we are operating, whatever government we are dealing with, as trying to raise the bar with respect to corporate social responsibility practices and environmental practices. We won't waver from that. We won't alter —
Senator Eaton: But has the Bangladeshi government responded to your great example?
Mr. Iliopoulos: We have not engaged in any significant discussions with them. Our focus is really on running our operations at the highest standard with respect to corporate social responsibility.
Senator Eaton: Mr. Chant, how has the Bangladeshi government received what you've tried to do there, or has there been no reaction at all?
Mr. Chant: There has been limited reaction. I must say that the high commissioner, located in Ottawa, has been very helpful and very pleasant to deal with. Our direct meetings with the Bangladeshi government included meetings with the labour and justice minister. That was over a year ago and prior to that as well.
I would say that more could be done on the ground in Bangladesh to drive improvements, but I believe that both the BGMEA, which is the garment industry association, and the Government of Bangladesh have made a good effort to encourage the degree of inspections and auditing and encourage the upgrading and improvements to the factory situation there.
Senator Eaton: Mr. Iliopoulos, you talked about their duty-free access to Canada. The United States has lifted that access.
Mr. Iliopoulos: With respect to apparel products, the United States never offered duty-free access to Bangladesh. The GSP program offered duty-free access in other areas outside of apparel, in other industries. Very recently, in light of the poor labour track record in Bangladesh, they actually suspended the country from GSP preference.
Senator Eaton: If you or other people don't have their own manufacturing areas, Mr. Chant, a subcontract, have you tried to lobby the Canadian government to have them lift this tariff-free access?
Mr. Iliopoulos: We raised this previously over the last couple of years with the Canadian government in terms of using it as leverage, essentially, to raise the bar and raise the standard with respect to CSR in the country. To date, Bangladesh still benefits from the duty-free access into Canada.
The point we're trying to make, using the United States as an example, where they do not have duty-free access into the U.S. and never had duty-free access to the United States, is that they're still at the top echelon in terms of apparel imports into the country, so the U.S. is a prime example in terms of demonstrating that Bangladesh doesn't need the duty-free access for the industry to thrive. From our perspective, what we're trying to say here is use this as leverage, essentially, to raise the bar from the CSR perspective and make local manufacturers in the country more accountable. We won't change the way we do things. The way we do things in the country we will continue to do and will continue to be a leading example. There is a role here that we believe governments can play and the Canadian government can play in terms of helping raise that bar.
Senator Eaton: If you have any further recommendations, would you send them to the chairman? That might be useful for our report.
Mr. Chant, have you put any pressure on the Canadian government to lift the tariff-free access?
Mr. Chant: No, we have not. We don't see it as our place to determine the mechanisms by which the Government of Canada would provide social aid or trade policies for the country. That's entirely up to individuals such as you and the government. We are relatively agnostic to those types of issues. We do, however, enforce our own supplier code of conduct. We have acknowledged the shortcomings of the industry in terms of building integrity, and that has changed. We've made some significant changes to standards across the industry. Through vehicles such as the Accord on Fire and Building Safety in Bangladesh, I believe that we're making the progress we need to make. The decisions on trade policy and aid programs and how those are delivered rest with the government, we believe.
Senator Eaton: I find that surprising after you have told me that the Bangladeshi government has not been that actively responsive to what you're trying to do in the country, and, on the other hand, you don't deal with the Bangladeshi government and you're not trying to get more leverage, pushing the Canadian government to perhaps apply a little leverage. Anyway, you have your policies, and that's fine. Thank you very much.
Senator Hubley: Welcome, and thank you for your presentations today. My question is for Mr. Iliopoulos. Gildan's website states that it has a goal to visit 100 per cent of its manufacturing facilities, including third-party contractors, at least once in an 18-month base period. It also says that in 2013 Gildan internal auditors or third-party auditors mandated by Gildan audited 91 per cent of your overall manufacturing facilities at least once. After that, the facilities not yet audited would be visited before the end of the second quarter of fiscal 2014. Could you tell me if this happened? Who do you use as third-party auditors, and how are they chosen?
Mr. Iliopoulos: Yes, I can confirm that it happened. Our policy is to conduct our audits over an 18-month period. We strive to do it once a year, annually, as you can see from the statistics you mentioned of 91 per cent. Yes, I can confirm that the balance was audited within the six-month period after that year end, and we continue. We will very shortly be releasing our 2014 corporate social responsibility report, and you will see similar results, and we will continue to adhere to that policy.
With respect to the third-party audits we conduct, there is a combination, varying groups, essentially. We have our own internal social compliance team which essentially reports up to our corporate head office in Montreal. These individuals essentially conduct independent, third-party audits at all of our facilities and our third-party contract facilities. These audits are unannounced, so the local manufacturing facility will not be aware when we show up to do the audit, when the social compliance team shows up. We apply the same approach with respect to our third-party contractors. There are specialists in the area that we also use to help us in terms of performing third-party contractor audits. These are organizations that are specialized in social compliance, and essentially they work with us in conducting audits.
Over and above that, our customers will also conduct their own audits of our facilities, like a Walmart, for example, or a Nike or Adidas. They will send their own social compliance teams, notwithstanding the fact that we do our own social compliance monitoring. They will send their own social compliance team to do their own audits.
Over and above that, there are third-party organizations. I mentioned that we were the first vertically integrated apparel manufacturer to be accredited by the Fair Labor Association. As part of the accreditation program that the FLA has, they conduct their own audits as well of facilities of their accredited members, so that is one example. WRAP is another organization that conducts their audits for granting their certification. Various different audits are conducted regularly at our facilities.
Senator Hubley: The results of the 2013 audit are summarized on your website, though the specifics from contractor facilities are lacking. There were 535 non-compliances found, of which 31 were major, 230 were moderate and 274 were minor. What kinds of problems were found, and how did you address them?
Mr. Iliopoulos: Varying degrees. Essentially, first it's important to understand that the vast majority of the production in our operations comes from Gildan-owned facilities. The third-party contractors we use represent a very small proportion of the total production capacity of the company.
In terms of the compliance findings, it could be record keeping with respect to compensation. It could be various health- and safety-related matters of varying degrees, and environmental matters as well. When we conduct an audit, and with respect to the findings that we find for each facility, we immediately put into place a remediation plan. Working with the local manufacturing facility, or in the case of a contractor, with the contractor, we will follow that up with an audit to ensure that there was a proper remediation. We won't just accept the local facility telling us they've remediated the items identified. The same independent team will go back and conduct a follow-up audit to ensure that all the remediation was done effectively and is in line with our strict code of conduct. With these types of findings, as we continue to audit our facilities on an annual basis, we keep in mind past findings to ensure that the remediation continues into the future.
Senator Nancy Ruth: When you hire subcontractors, what is the reason you're hiring them?
Mr. Iliopoulos: A lot of times it's certain specialty products that we make where we'll deal with a third-party contractor because we don't have the necessary expertise within our facility. I'll give you an example. We own the Gold Toe Brand, and we make dress socks as well. For a lot of that production, we'll use third-party contractors to make those products. Notwithstanding that, the code of conduct that we apply at our facilities, we apply that very same code of conduct at our third-party contractor facilities and expect our third-party contractors to abide by the same standards that we expect our own internal manufacturing facilities to abide by.
Senator Nancy Ruth: Can you help me understand? In Bangladesh, for instance, where I have seen your factory and was very impressed by it, why is it places like Rana Plaza could still, I assume, undercut your price? I have no idea whether that's true, but how is it that these small businesses that are subcontracting to Loblaw, or anybody else, can still make their profit, still abuse workers, when there is a choice of suppliers like Loblaw buying wholesale or maybe retail from you for various products? You don't make the whole line of Joe Fresh, but you do make the T-shirts and so on.
How is it that everybody is making money? Those small subcontractors — well, they're small and you're huge, but apart from that, why can't the standards be more similar? You are an industry test.
Mr. Iliopoulos: I can't speak for other contractors in the region regarding their profitability and how they generate their profits, but I can tell you that we believe that we're cost-competitive globally in terms of how we have established our supply chain. We have been in this business since 1984, when the company was first incorporated, and we have put a significant focus on our CSR practices. We leveraged the experience we had in Honduras, for example, over the last 10-plus years in terms of building a robust social compliance program, and we've used that essentially as the model for when we went into Bangladesh.
We feel that we're a large-scale, vertically integrated manufacturer that can provide competitive pricing and can compete with whatever apparel import products globally. Essentially, we believe that our model works. We believe that cutting corners in corporate social responsibility should not be acceptable in producing a product, which is why we place the emphasis we do on our CSR program.
Senator Nancy Ruth: Mr. Chant, why would Loblaw not buy the products it can from Gildan and avoid the subcontractors that have different labour practices, building standards and so forth?
Mr. Chant: Senator Nancy Ruth, let me be clear. We do not procure from subcontractors who aren't authorized, effectively making them contractors. We don't do that. We do not contract from anyone who doesn't meet our high standards. We've been auditing all of our factories, or all the factories we source from directly.
I can't speak to why we're not sourcing from anyone else or why we source from the factories we do. The vendors we procure from meet our supplier code of conduct and live by our very vigorous and high standards.
I disagree with your assumption that we're procuring from subcontractors who aren't meeting those standards.
Senator Andreychuk: Thank you to both witnesses for appearing.
One of the areas that we haven't canvassed is this: In the Foreign Affairs and International Trade Committee, we have had Gildan in on the Honduran trade agreement, and we track trade possibilities. Virtually every company and business that comes before us says they want to work in a secure and safe environment, so they are assessing risk. To the extent that, increasingly, companies are saying to us risk is the human rights factors, the work conditions, et cetera, which are factored in, partly because there is so much transparency and scrutiny, and people within their own countries and outside are raising these issues.
To both gentlemen: How do you assess, not beyond your corporate social responsibility but in the business venture, how do you determine whether this is a country you want to work in? I recall on Gildan, the comment was made that Honduras wasn't a safe place to do business until there appeared to be a turnaround in the government and some movement towards addressing some of the issues in their country, and then you felt comfortable enough to go in there. How do you weigh that beyond corporate responsibility, that issue of where you're going to go to work?
Mr. Iliopoulos: From our perspective, security is just as important as corporate social responsibility. Our employees are our most valuable asset. We make a significant investment to ensure that we provide safe working conditions in the countries in which we operate, whether it's Honduras, Bangladesh, the Dominican Republic or any other country in which we have an operating presence.
It is one of many factors that we consider. We have a significant presence in Honduras. We find that there is a very skilled and qualified workforce in the country.
Proximity to market is also very important for us. Canada and the United States are two of our biggest markets. We believe, in terms of replenishment, in servicing our customers, that proximity to market is also very important. How we approach this essentially is making a significant investment to ensure safe and secure working conditions.
In Honduras, for example, we have ATM machines inside our facility so that employees can access money in a safe and secure environment as opposed to other locations which are not as secure. That's another important reason why we offer transportation for our employees to and from work, picking them up at a safe location, bringing them to the facility and then dropping them off at a safe location.
It's an important consideration, for sure. Without question, it's something that we put significant value and investment into.
Mr. Chant: As for Loblaw, as mentioned, we don't operate factories in these countries; we don't have an ownership position in factories in any of these countries. Our decisions of where to source are driven by a wide range of factors, but I would say we have a number of sources of information as to the relative safety, security and credibility of both vendors and factories that we're dealing with.
We're increasingly satisfied with the audit process we have put in place. Our third-party audit organization is Intertek. They're an internationally recognized leader in this field, and they provide us with advice as well. The safety and security of the employees, the workers at the factories from which we're sourcing, we believe increased and is satisfied to a large degree by the audit process that we have put in place.
Senator Andreychuk: Mr. Chant, certainly in the papers now there are comments and reviews that the Bangladesh government has been slow to respond to these issues, and only when there is some international scrutiny do they come forward, including with criminal charges — at least it seems from this point of view.
Are there countries that you will not go in and work or source from, or are you basing it only on the factors you have pointed out to us? In other words, do you take any moral judgment on a country and its governance?
Mr. Chant: We do. We look to advice from the Canadian government for some of the inputs into those decisions. The number of countries that we source from is relatively small. It includes, of course, the United States and Mexico, but, as I mentioned, countries like India, Vietnam, Bangladesh, Indonesia, China — all countries with which Canada has trade relationships and that we're comfortable sourcing from.
Senator Enverga: Thank you for the presentations, gentlemen.
When you deal country to country, what can you describe to us in terms of the minimum working conditions that you require for every company that you deal with? Do you have any minimum working environment, or is the minimum working environment the same from one country to another?
Mr. Iliopoulos: From our perspective, we essentially own the vast majority of our manufacturing, so the standards we put in place will not vary from country to country. The working conditions I talked about where we pay wages that are significantly above the industry minimum wage, the on-site medical clinics with doctors and nurses, the transportation for our employees, the subsidies of the meals, the educational training that we provide, the financial aid for education that we provide, we provide that consistently, whether it's in Bangladesh or Honduras or the Dominican Republic. Notwithstanding the country in which we operate, we apply consistently the standard we put in place from a corporate social responsibility perspective at all of our operations. That's a critical component of our company's business strategy.
Mr. Chant: The criteria we apply to all the factories that our vendors source from are clearly outlined in our supplier code of conduct. It includes fundamental things: no child labour; employment must be freely chosen, which may seem to you and me like a very normal and natural issue, but it's something that isn't always respected, and we demand that; no discrimination; no abuse; no harassment; and workers must be allowed to assemble freely and to discuss whatever issues they want. Of course, local employment laws must be respected. Working hours can't be excessive. A reasonable living wage must be paid, and that's on the basis of the local minimum wages assigned by governments in various countries where we're sourcing. Working conditions have to be safe, and ethical conduct has to be respected at all times.
Our supplier code of conduct is the basis on which we determine whether a factory is worthy of our sourcing from them.
Senator Enverga: Mr. Chant, when you mentioned assembling freely, do you mean you are condoning or making it possible for unions to exist in factories or something like that?
Mr. Chant: Yes, in fact, if I read from our code of conduct, under "freedom of association must be respected,'' it reads further that workers or their representatives must be permitted to associate and bargain collectively. Workers' activities with respect to their rights and interests, including association and collective bargaining, must be permitted to take place in the workplace.
Senator Enverga: Is that the same thing for your company?
Mr. Iliopoulos: Absolutely. From our perspective, freedom of association is a fundamental component of our code of conduct. If you look at our manufacturing operations today, about 10,000 of our employees are currently unionized employees that are operating under a collective bargaining agreement. Another 11,000 employees are actually represented by unions at our facilities. When you compare the benefits and working conditions that we offer at our unionized facilities with our non-unionized facilities, again, I go back to the same message that it is consistent.
Senator Hubley: My question has been answered.
Senator Ataullahjan: Mr. Chant, you just said you have zero tolerance for substandard factories. On the issue of subcontracting, how do you authorize subcontractors? Who audits them, and what process is in place? Could you elaborate?
Mr. Chant: It would be subject to our vendor making a request of us for permission, and we would have to get the details of the decision as to why they need to undertake that, and then an audit would have to be ordered and conducted and the results reviewed before we would approve the factory to be used.
Senator Ataullahjan: Who would audit them? Is it someone you would choose?
Mr. Chant: We have a third party audit company, Intertek, a highly recognized international organization that works for many in the apparel industry. They conduct the audits on our behalf. Our on-the-ground staff would be involved. Upon the outcome of the audit, it would be reviewed, and if the audit was clear, then the approval would be given. If remediation or improvements were required, our local staff would work with the factory owners to ensure that those improvements were made before approval was given to start production, before a purchase order were issued.
The Chair: Mr. Chant, I have one question of you. I'm curious why Loblaw decided to join the Alliance for Bangladesh Worker Safety instead of the Accord on Fire and Building Safety in Bangladesh.
Mr. Chant: Madam Chair, I don't want to correct you, but we joined the Accord on Fire and Building Safety in Bangladesh, not the Alliance for Bangladesh Worker Safety. We signed up for the accord for one reason primarily, and that is that we believe the accord most effectively stood up for workers' rights and the protection of workers.
I think I mentioned in my opening remarks the requirement of signatories to the accord to ensure workers were compensated while factories were repaired and renovated or upgraded, whatever improvements needed to be made, which sometimes can result in the displacement of workers. It's the obligation of the brands, the vendors and the factory owners to ensure that those workers aren't simply released from duty while the improvements are made. We thought that was a particularly important reason for signing the Accord on Fire and Building Safety in Bangladesh.
If I might, Madam Chair, I'd like to point out that we are Canada's largest private sector employer, with over 100,000 unionized employees. We're very proud of that fact and would not want to let our workforce — our colleagues — down, and so the portion of our supplier code of conduct that points to freedom of association and collective bargaining is critically important.
The Chair: Thank you very much, and thank you for your presentation, Mr. Chant. Certainly, you have shown leadership in this area. We are appreciative and look forward to working with you in the future because we will continue with this study when Parliament is reconvened in the next session. We thank you.
Mr. Iliopoulos, we want to thank you. As Senator Nancy Ruth said, she and I were in Dhaka, and we did go to your manufacturing plant there and were very impressed.
We thank both of you and hope that you will continue working with us on this study.
Members, we will now continue with the next witness. I'm very pleased to welcome Syed Sajjadur Rahman, Senior Fellow, School of International Development and Global Studies, University of Ottawa, and Senior Associate, Universalia, Montreal. He also worked with CIDA for over 20 years.
We are really happy to have Mr. Rahman here today. I think I speak for the committee when we say that he is a person we really appreciate hearing from. He gives us a lot of time, and we always look forward to hearing his insightful remarks on this issue.
Mr. Rahman, welcome. We are happy you are doing this again for us. I understand you have some remarks.
Syed Sajjadur Rahman, Senior Fellow, School of International Development & Global Studies, University of Ottawa, and Senior Associate, Universalia, Montreal, as an individual: Madam Chair, distinguished senators, thank you for asking me to appear once again before your committee.
This is a topic of significant Canadian and global interest, and one of particular interest to me. It's nice to be on the Hill on the day Bono was here because it shows that people care about international development. That's nice, at least from my point of view, because I have been a student of international development all my life. I've spent 21 years at CIDA, mostly in senior management levels. I'm a senior fellow at the School of International Development and Global Studies in Bangladesh at the University of Ottawa, and I'm also originally from Bangladesh.
Before I start my remarks let me just say I'm not a company man. I'm not from Loblaw or from Gildan, and I do not represent any interests or anything, so my remarks are essentially those of someone observing the scenario in Bangladesh or in places like that and my take on the situation regarding garment workers and in particular corporate social responsibilities.
Let me just start with a very broad statement: The purpose of human endeavour is to improve in a sustainable manner the quality of life for all peoples of the world. Since most of humanity works for a living, it stands to reason that this improvement must include a safe, secure and satisfactory work environment.
Today we are addressing a specific component of this general principle. How can we improve the working lives of garment workers, and who will ensure that this happens? In particular, what role do business corporations play?
I want to quickly highlight four aspects in the next few minutes. First, why are you discussing this issue? Second, who should be a party to finding a solution? Third, what are their responsibilities? Does corporate social responsibility fit into a sustainable solution? And finally I want to talk about the concept of collective responsibilities. Then we can have a discussion. That's the part I personally enjoy the most.
So why do we keep on discussing this issue? Because two years ago the Rana Plaza, a building housing several garment factories in Bangladesh, collapsed killing more than 1,100 workers and injuring many others. The workers were forced to come to work and to their death in patently dangerous circumstances. Greed and avarice led to a blatant disregard for the lives of people.
Sadly, Bangladesh is not the only country where workers' rights and safety are compromised, abused and ignored. This is an endemic scenario. The issue is what can be done to prevent the repetition of incidents like Rana Plaza.
This leads to my second point: Who should be a party to finding a solution? The first of these parties is we the consumers. We want the best products, whether it is shirts, jeans or T-shirts, at the lowest possible price. The retail stores, like Loblaws or others, who are in competition for our money, try to outdo each other and look for the lowest-cost producer who can provide these products. In the garment industry, these producers are most often located in Bangladesh or countries like it.
Within the industry there are the workers and the owners. These industries are regulated, hopefully, by the domestic governments in terms of the production processes and by the Government of Canada and other importing governments in terms of exports of the garments. There are six groups of actors in this process: the consumers, the retailers, the owners of the factories, the workers and the two governments.
I now come to my third point. What are the responsibilities of each of these groups in finding sustainable solutions to providing better working conditions for the garment workers?
The first consideration is whether we consumers are prepared to pay higher prices in order to absorb part of the increasing costs that will be required to provide better working conditions. The fair trade type of solutions — in reading the transcripts I saw you heard a bit about those — are all based on this premise and are well-meaning. However, they represent a minuscule portion of global trade and are not the mainstream nor a sustainable solution.
Studies have also found that benefits from these types of arrangements often do not accrue to the workers. I would be happy to answer questions on that.
Finally, sad to say but it is true, we the consumers are a selfish lot. It is in our DNA that we always look for the best bargain, and in the market system that is the norm.
The second group I want to talk about is the governments. The role for these entities is clear: Make sure the proper rules and standards are in place about workers' rights and safety; make double sure they're implemented. If the developing countries do not have the capacity to frame and implement these rules and standards, countries like Canada can help them build a capacity to do so.
Should Canada impose punitive measures if the production facilities are not up to standards? I have argued before this committee that this is similar to cutting off your nose to spite your face. An embargo, say on Bangladesh garment exports, will hurt the poor workers, especially women.
Let me now talk about the industries: the retailers here and the producers in Bangladesh and other countries. The primary market behaviour for this group is profit maximization. The issues are over what period profit maximization and whether they have any social obligations beyond simple profit maximization.
This is where corporate responsibility, or CSR, comes in. CSR has been defined as voluntary activities undertaken by a company to operate in an economic, social and environmentally sustainable manner. I underline the word "voluntary.'' This is a critical word. It suggests that businesses are ready to be accountable to a wider range of stakeholders beyond their shareholders and investors. The reason why this might be the case is because at this point in time there are some demands for greater corporate disclosures from groups like communities, investors and activist organizations. There is some evidence that some socially conscious consumers are either rewarding or punishing companies based on their perceived social performance.
Second is some investor pressure from the way they assess a company's performance that might include ethical concerns. Third is a concern for reputation. Some companies are introducing codes of conduct, as you heard the Loblaws person talk about, for their suppliers in order to protect their own reputations.
But the practice of CSR must be seen in the context of profit maximization. The longer the time horizon, the more the producers and the retailers will be inclined to take into account considerations beyond the financial bottom line. Building a stable industry requires a stable workforce and a secure workplace, but alas, the garment industry is fickle and especially susceptible to marginal variations in cost. An increase of 10 cents in the cost of production of a shirt can lead a retailer to look elsewhere for their supply. Unless there are strong pressures — and I stress the word "strong'' — there is little incentive for owners to implement concepts like CSR.
The academic evidence on the impact of CSR on working conditions is mixed. Agencies like the U.K.'s Department for International Development has argued that by following socially responsible practices, the growth generated by the private sector would be more inclusive, equitable and poverty reducing.
However, others have questioned this claim. They cite a lack of empirical evidence and a real business case for corporate social responsibility, as well as unresolved governance questions. Yet others argue that the current CSR agenda is inappropriate for addressing development goals.
Finally let me talk about the notion of collective responsibility. My observation is that businesses are unlikely to implement CSR by themselves without any external pressures from civil society organizations, efficient labour movements and meaningful representation from local communities. But the most important impetus must come from governments in the form of enforced rules and regulations that guarantee safe and secure workplaces.
This is not a negative comment on the behaviour of business organizations. Just as we, the consumers, look for the best product at the lowest price, so do the enterprises.
As Michael Porter and Mark Kramer said in the Harvard Business Review of December 2006, "Corporations are not responsible for all the world's problems, nor do they have the resources to solve them all. . . . a well-run business . . . can have a greater impact on social good than any other institution or philanthropic organization.''
I actually happen to agree with that sentiment. The calls for CSR should not divert attention from the responsibilities of the state. Governments in developing countries need to accept greater responsibility for ensuring that workers are assured of a safe, secure and satisfactory workplace. We should help them to do so if they do not have the capacity, and we should insist that these rules are put in place.
Let me end with the notion of collective responsibility. It is the responsibility of all of the six actors that I mentioned before to ensure that workers have a good place to work in. The chain starts with the consumers who should be willing to pay a higher price. This higher price should be transformed into higher wages and better workplaces by the industries, and the government should ensure that all of this happens and that the well-being of the workers is assured.
That is what I mean by collective responsibility. In the words of the Three Musketeers, for those of you who know the reference, "All for one, and one for all.''
Thank you. I look forward to the discussion.
The Chair: Thank you very much, Mr. Rahman, for once again giving us your time.
I have a question for you. One challenge that exists in Bangladesh is that if the price goes a little higher, there is always the fear that the garment industry could move to another country. Those of us who care about Bangladesh and about what is happening to the women there obviously don't want them not to have a job. I am really struggling as to what role Canada should be playing in ensuring a better life, a better quality of life, more safety for these women who work for our luxury.
Mr. Rahman: Shall I answer now?
The Chair: Yes, please.
Mr. Rahman: I appreciate the fact that you are asking the question especially for the women, but the answer applies to all workers, though especially the women because the garment industry has been a major source of empowerment for the women in Bangladesh, without a doubt.
Let me try to answer with an example. In Canada, would you ask the restaurateurs association to self-regulate? Would you not have health inspectors go to visit the restaurants to ensure that they are maintaining proper standards? If that's the case, we should have the same rule everywhere. It should be the responsibility of the Government of Bangladesh to ensure that the proper standards are in place. The question is: (a) Do they have the capacity? (b) Do they have the willingness?
On the capacity question, Canada can, without a doubt, help because Canada has had a long history of enforcing regulations that are meant for social well-being, whether in industry or other places. Canada can, without a doubt, provide help in terms of how to do standardization, how to build better workplaces and so on.
The one caveat I have with that is that it should not be done on a grand basis. I'm an old aid man. We should not give the money away. We should not say, "Here is $10 million. Go figure out how to do it better.'' We should do it on the basis of returns for, if you like, services because, after all, we will be helping businesses. So that's the first thing. Canada can, without a doubt, help in setting the standards, but the second, more critical question is whether the government of Bangladesh is willing to impose or implement or enforce the standard. That is a more difficult political question, and, on that, the answer rests outside of Canada. There has been no instance in history where external actors have been able to enact fundamental governance reforms in a country. That willingness has to come from the country itself. The question becomes, is Bangladesh in a position where such willingness is evident or will hopefully be evident soon? The answer is probably yes, especially because the fellow who owned the Rana Plaza just got a death sentence for his role in the tragic incident. So, over time, in a democratic process, accountability will emerge, and if one looks at the history of the world and democratic societies everywhere, this is how it happens.
How much time will it take for that to happen and so on? We can go back to the industrial revolution and look at the child workers in England. How long did it take to abolish that practice?
To answer your question, senator, in terms of building the capacity of the Government of Bangladesh to enact the rules and regulations and to implement them, the Government of Canada, in association with other Canadians, can help in building the capacity of the government and perhaps the industry associations.
In terms of the willingness of the government to implement and enforce the rules, we shall have to let the democratic process take its course. That's the best answer I have.
Senator Ataullahjan: You kind of answered my question, which was, just looking at what you said, that governments in developing countries need to accept greater responsibility.
Talking about the Bangladesh government, given the current political atmosphere, do they have the capacity and the will to implement and enforce international rules and regulations, such as the ILO principles?
Mr. Rahman: Do they have the technical capacity? Yes. Perhaps they might need a little bit of help. Do they have the willingness? I'm not so sure. The good news there is that in Bangladesh a democratic process is under way. The best indicator of that is that there are elections. People get elected. One might argue that the elections are flawed, that there are scenarios that are corrupt and that votes are rigged, et cetera. True, but I'd like you to give me an example of a democratic country where, when democracy was first being founded, such practices did not happen. In a nascent democratic process, you will get flawed democracy, but the hope is that over time accountability will emerge. Our best hope for that to do so is the democratic process.
Senator Andreychuk: I take your point about the political will and the capacity, but do they understand — not the governance and those issues — how, in this interconnected world, they have to respond on those issues, not only for the benefit of their own people but for the economic well-being of the country? You cannot ignore it. You could have maybe 20 years ago, 30 years ago. You shouldn't have, but could have. Now, if they are going to want to attract business, they are going to have to make some of those assurances. Have they made that equation?
Mr. Rahman: I think they have. Have they made it in total? This is the power of the market in some ways. If the market kind of signals — market meaning consumers here — that, look, we are not going to buy your goods if they are not produced the right way or if the workers are not guaranteed proper or safe and secure working conditions or paid proper wages, that signal would be heard loud and clear, without a doubt. That's what business is all about.
But is that signal evident? As I'm arguing in my opening presentation, unfortunately, the market signal is that I want to buy the best product at the lowest price. Do I really care about how it is made, and so on? Do I really want to know?
What we have now — and this is very interesting; it's where fair trade and all that stuff come in — is a group of socially conscious consumers in a society like Canada and the United States where they're willing to pay a higher price for a product that is properly made.
I teach globalization at the University of Ottawa for masters students and I had them do papers on fair trade. Basically, these markets are not mainstream markets in the sense that they are a small portion of the market. There is a small, niche market where there are socially conscious consumers who are willing to pay the higher price. However, for the overwhelming majority, the market is the market. I want the best products for the lowest price.
Will the market provide the signal? If it does, it will be heard, no question. It will not take a government, an association or anybody; the market will be loud and clear.
Senator Andreychuk: Corporate social responsibility has been a way that our society has said, first, we don't want our companies participating in practices that are harmful and don't meet international standards, et cetera. You don't think that has impacted societies and gone beyond niche awareness? Do you not think that is broadening?
Mr. Rahman: From a lifetime of experience, any voluntary arrangement can be broken without any fear of persecution. Where it matters is where there is a stick.
I read the testimony of the EDC person who came to your committee. When EDC says to a Canadian company, "I'm not going to give you a loan to set up a country in country X if you don't meet this and that conditions,'' that matters. It provides a signal that says that I have to do this and that before I can get the loan. That's a market signal.
Let me use an example of something you would appreciate, namely the Convention on the Elimination of All Forms of Discrimination against Women, CEDAW. All countries of the world have signed this. When I was at CIDA, I was head of Asia, and we used to finance projects for CIDA. Look at the incidence of implementation of CEDAW. When we did studies, we found that they signed it, but the implementation is not where it's supposed to be. You ask why that is the case? It is because it is a voluntary agreement. It is a voluntary arrangement and, ultimately, sovereign power dominates.
Where there is a signal that matters, people will listen.
Senator Ataullahjan: Mr. Rahman, as someone who has been through Rana Plaza and visited a factory that was well run — that is, the workers were well looked after; medical facilities were available on every floor — I'm a great believer in keeping the factories in Bangladesh because it supports over 3 million women.
Sohel Rana, along with his parents, was recently charged with murder, as were the owners of several other factories in the building and half a dozen government officials, too. Do you think the measures that they've taken, these punitive measures, will make a difference in Bangladesh? Will other owners think twice before sending workers into unsafe conditions?
Mr. Rahman: Absolutely. It's like you're going to be dead if you don't provide good conditions, right? That's the signal that's been sent.
The corollary would be that one has to distinguish between au courant producers and producers who are not that savvy in terms of where international conditions are going. The larger producers and the more savvy producers are retooling their factories because they recognize that it will come to a point where people are going to demand that the factories are up to standard; otherwise, they will not be able to sell their goods. It's also efficient.
Market conditions are dictating efficiency. Market conditions are dictating that you set up conditions or factories that are in many ways more modern, safer and more state of the art. It is the evolution of an industry. The simplest example I can give of that is the computer industry in South Korea or Taiwan. When they started, they were simple assemblers and they used to scrounge parts. They are now the biggest producers of mobile telephones and televisions, and their factories are the envy of the world in the electronics industry. They didn't do this because somebody told them to, they did this because the markets demanded it. The markets signaled that was the way they should go. I'm confident that that's how the industry will evolve. You're absolutely right, senator, punitive signals such as those are extremely important.
Senator Hubley: Thank you for being here this afternoon. In your previous testimony here, you offered suggestions about how Canada can ensure worker protections, and you stated that we should not prohibit or limit imports because this only hurts the workers.
Last week, we heard from Barry Laxer of Radical Design in Montreal, who told us about the good working conditions for his employees at his two Bangladeshi factories. But he said that he had to close down the larger one because two of his primary customers pulled out of Bangladesh because of the bad press. Here is a fellow who, by his own account, was providing good and safe jobs, but now he is not because of the backlash.
His former employees are unemployed or may be working elsewhere in poor conditions. What can be done, if anything, to prevent this sort of thing from happening?
Mr. Rahman: I'm afraid not much, because it's like company X contracts a company in Bangladesh to produce garments and then at one point decides to pull out and produce elsewhere, which is what's happening in this case.
I don't know of any rules and regulations that can prohibit this company from pulling out. For that company, it's purely a market decision in some ways. Unless there are some egregious reasons for having pulled out, it's the right of the owners of that company to decide where they want to produce.
On the other hand, if the question was that the company pulled out of Bangladesh because they said that we would not like to buy garments that are produced in unsanitary, unsafe conditions, that might be interesting, but we haven't seen that happen.
Senator Enverga: Thank you for the presentation. You mentioned earlier that it's usually the price that dictates the habits of consumers. However, when you look at signature brands, they are ridiculously priced items.
Do you think it's wise to maybe put them to a higher standard of worker rights, or maybe they should pay a lot more for these workers if the products are being produced in, let's say, Bangladesh? Do you think it's wise to do that?
Mr. Rahman: Let's take examples — Polo, Armani and Lacoste. Should they be paying? They do, actually, because most of the brands work with the higher-end manufacturing concerns in Bangladesh. I know them. I know the people who produce these kinds of goods and this kind of apparel in Bangladesh, and they are the higher end. They are the ones that have the state-of-the-art facilities. Why? Because that's what the market wants. That apparel needs to be produced at a higher standard of manufacturing than your average T-shirt or shirt. Because they need to be produced to a higher standard, the equipment and the facilities need to be of a higher standard as well. The workers need to have higher skill levels as well. Because the workers have higher skill levels, they get higher wages. Yes, in fact, those factories are really very good.
Senator Enverga: On another note, I know that there are differences between factories and from one factory to another, from one country to another. However, for the basic consumer, it's hard to determine whether this kind of garment is being produced here or being produced under certain kinds of conditions. What's the best thing that the consumer can do? Is there any watchdog that monitors these kinds of factories? Is there something we could look after? As a consumer, maybe I should be able to search this kind of product on a certain location.
Mr. Rahman: This is like the Good Housekeeping Seal of approval, right? Somebody stamps it and says this was produced in a factory that had good working conditions. One could, for example, think of an organization that provides that type of signal in the sense that this apparel was produced in this type of condition.
But the question to ask is, will it influence the consumers? Will it influence the consumers in terms of buying the products that are produced in these conditions? For certain consumers, that will matter, because they will care how the workers are treated. But what the market is saying is that for the overwhelming majority, that's not really the most important concern.
Senator Enverga: Do you believe that most of the countries follow the same guidelines for workers' rights? Would you be able to let us know if you know anything about certain countries that are not following the international agreements or something like that?
Mr. Rahman: Yes. I can talk about Asia. I spent a lifetime studying that. In economics, we have this thing called the product cycle, which means that when you start off the process, you produce the cheapest possible goods in countries where there is a surplus of labour. Because there is a surplus of labour, wages are low, and therefore you can produce stuff at a low price. As you move along the path, and take South Korea, Taiwan, Malaysia, Thailand and so on, as they move up the path, demand for these products grows, and wages grow. As wages grow, you move on to higher-end products. As you move into more and more higher-end products, your facilities are getting better. Not only that, but the process takes the country to a development context.
Let me put it this way: When the development process starts, when you're very poor, all you care about is food in your belly, a place to stay and maybe children go to school. But when you've met those needs, you want something more out of life. You want human rights. You want to be able to express your opinions. Once you reach that stage, that is when what you describe happens. Because you say, "I have met my basic needs, and now I want a better place to work. I want to express my opinion. I want you to be accountable for your actions.'' When that happens, things get better. Working conditions get better, and people's lives get better. That is the story of a country like Canada. The U.S. is exactly the same story. As the accountability standards grow with the standard of living, so do the working conditions.
Senator Enverga: Is that a country we're supposed to be buying from?
Mr. Rahman: It's difficult to say.
Senator Andreychuk: Where sanctions are.
Mr. Rahman: For example, the one I remember is South Africa, but that was a political reason. That was apartheid. Because of outright and blatant racial discrimination, Canada and other countries specifically said, "We do not want to do business with you.'' But in a purely business sense, like in a purely business consideration, do I recall a scenario where we said, "We are not going to buy from you because you treat your workers very badly?'' Honestly, I don't remember any scenario like that.
The Chair: I have a question concerning the future of the garment industry. I apologize, but I come back to the issue of women. You said something that's so profound in many ways. When you're hungry, you will take any job. That's so true. But when your basic needs are met, then you are looking for education for your children, hospitals, safety for you so you can survive to be there the next day for your child.
Mr. Rahman: Yes.
The Chair: All this seems a little precarious. We're not quite there. Maybe I'm mistaken. We're not quite there with Bangladesh. There is still a stage between not hungry but not quite fighting for quality of life.
Mr. Rahman: Exactly.
The Chair: So what next?
Mr. Rahman: This is a question right after my heart. I've been doing a lot of work on development stages of different countries. Bangladesh right now has per capita income of about $1,010. This is a very average number. The cut-off point for a low-middle-income country is $1,045, so Bangladesh is very close to becoming a low-middle-income country. In fact, it will become so within the next three or four years, at most.
That has a bearing on the question that you asked, because as women get empowered in terms of income earning and so on, independence and the democratic process develop along with it. People will demand more, not only from their leaders but from other places, too. Labour will get more organized. They will be more thorough. They will be more demanding about the conditions in which they live.
Right now, you're absolutely right. Bangladesh is almost hovering over the edge of the next stage. In fact, if you like, I'll forward you a paper that we wrote for a conference recently by the Canadian Association for the Study of International Development, which we called "Development Partnerships in Middle-Income Countries: the Transition Phase in Bangladesh,'' which talks about exactly this subject.
The Chair: I would appreciate it if you would be so kind as to send us that paper.
Mr. Rahman: And the question is, are they ready? One thing you have to know about the Bangladeshi people is that they're politically extremely savvy. That country is going to mature politically, and that's the fundamental, and the fundamental need for that to happen is for the elections to continue. Bangladesh cannot afford to have a non-democratic process take over. That's the fundamental issue. If there is a foreign policy issue objective in Canada for Bangladesh, that would be the primary subject.
The Chair: Mr. Rahman, it's always such a pleasure. You make us think. Actually, you make us uncomfortable, and so you should. You make us think. Thank you so much once again for being here. We certainly appreciate your presence.
Senator Salma Ataullahjan (Deputy Chair) in the chair.
The Deputy Chair: Honourable senators, I would now like to welcome our final witness, who is appearing via video conference. From Human Rights Watch, we welcome Nisha Varia, Director of Outreach for Women's Issues.
I understand that you have some opening remarks to present to us, and then you will be available to answer the senators' questions.
Nisha Varia, Director of Outreach for Women's Issues, Human Rights Watch: Thank you. It's a pleasure to be able to speak to you today. I will keep my opening remarks very short, and I look forward to the questions that you may have.
As you may know, Human Rights Watch is an international organization. We work in about 90 countries around the world on a range of human rights issues, from those that occur in armed conflict to women's and children's rights. Labour rights have been a big priority, as well.
Most recently, we have done two investigations on abuses against workers in the garment sector. One is a report on the garment workers in Cambodia. I'll speak about some of the main findings of this report. It involves a number of companies and brands that source from Cambodia, including some in Canada, including Joe Fresh. The second report looks at labour rights abuses in the garment sector in Bangladesh.
To give you a brief summary of our findings, we find that there continue to be many problems in workplace conditions in both of these sectors. To take Cambodia first, we interviewed hundreds of garment workers across five different provinces in more than 70 different factories. Some of the main problems that we encountered were a very broad use of forced overtime. Another was the overuse of short-term contracts; many times workers would be kept on two- to three-month contracts for years at a time. This served as a way to avoid paying benefits to those workers. It also made it very easy to fire those workers who wished to form unions. And it also made it very easy to dismiss workers who became pregnant; we documented a lot of pregnancy-based discrimination.
There was an increase in the minimum wage in Cambodia. Along with that increase, we saw that the intensity of workers' production also increased. So in the same amount of time, workers were sometimes now forced to produce more garments than before. They had to work faster and faster, and there was more pressure not to take rest or water breaks. Those workers who had any medical issues and wanted to take sick leave really often had the choice between continuing to work while they were ill or losing their job.
We found a lot of intimidation of workers trying to form independent unions. Currently, there is a trade union bill being discussed in Cambodia that would make it even more difficult.
Moving to Bangladesh, there has been a lot of attention toward Bangladesh and the different efforts there to try to avoid disasters such as the Rana Plaza factory collapse. While there have been some improvements in terms of the labour law and a small increase of the number of labour unions, our report really focused on the attacks and intimidation of workers who either formed trade unions or tried to join them. These were pretty egregious attacks where workers might be physically beaten and/or would lose their jobs. Many of the workers who were women would have sexualized threats against them. So while there was some space for workers to organize, they also faced increased backlash. That's what the Bangladesh report focuses on.
I will conclude by saying that we have been engaging with many of the brands that source. I've been involved with our efforts on Cambodia and talking with companies, such as Joe Fresh, Marks & Spencer, Armani, Gap, Adidas and H&M. It has been an interesting experience to see how the companies have reacted to our same findings on the ground but a different level of response in terms of the protections they will provide.
Our main recommendations are about increasing transparency in the supply chains, ensuring whistle-blower protections for workers; addressing the overuse and exploitation of short-term contracts, which really affects working conditions for garment workers; and generally creating a safer space for workers to organize.
I'll stop it at that.
The Deputy Chair: I have a couple of questions. In Bangladesh, the majority of the workers are women, over 3 million. What does it mean to the empowerment of women in Bangladesh? I also realize that if these women did not work in the garment factories, a lot of them would not have jobs. It seems to be that in Bangladesh, women working in the factories is welcomed and not frowned upon, and it is easier for the families to let their girls go because the majority of females are working in factories.
If they were not working in the garment industry, what other things could these women do? Also, with the status of working benefits, you briefly touched on maternity leave. But we are also talking about issues such as proper bathroom facilities and handling of sexual harassment.
Ms. Varia: These jobs are an incredibly important source of employment for women in Bangladesh, and we have found that having their own source of income can be very empowering for women.
There are a number of different impacts that this may have. Having the opportunity for a good job can help to delay the age of marriage and delay child-bearing. Bangladesh has one of the highest rates of child marriage in the world. More than 50 per cent are married at a young age. When there are good education opportunities and when families know that their daughters can provide and support their families economically, this can help delay marriage and the problem that is affecting the whole country.
It also can help with relations within the household. There is a lot of evidence to show that women who have control over economic resources may be better able to avoid or to leave abusive relationships. It plays a big factor in terms of domestic violence as well.
There is no doubt that having a steady source of income can be very empowering for workers. With keeping these jobs, many times when we are talking about these abuses, people have asked us whether there should be boycotts or if the companies should pull out of these factories if we have these conditions.
We believe those jobs are very important, and we would like to see that the workplace conditions improve, and that they do address many of the gender-specific concerns that come up with a predominantly female workforce, such as maternity benefits and making accommodations for workers who are pregnant. Many times they may be standing for very long hours and not have the facilities to sit or to take extra rest breaks that may be necessary. Breastfeeding facilities and sexual harassment are issues. What we found in Bangladesh, for those workers who are trying to unionize, is that many of the threats directed at them included threats of rape or very derogatory comments quite gendered in nature.
The Deputy Chair: Is there an understanding within the factories where they work that sexual harassment has no place in the workplace? I've seen it where women have to face all these comments on how they look. How do you go about making the managers understand that that is not acceptable?
Ms. Varia: Right now, this is not standard in the workplace. The concept of sexual harassment can vary from facility to facility. In general, from the interviews we had with workers, it was something that was accepted, seen as the status quo and not seen as something they felt they had much space or ability to complain about.
This is where I think there is an important role for a number of actors. The brands that are sourcing from these garment factories play an important role because those business relationships are so important, saying that sexual harassment and dignity in the workplace are important, a part of the workplace conditions. It's much easier to focus on safety conditions or looking at wages, and often some of these gender concerns get marginalized and sidelined in the discussion.
Bringing it up as an important standard that's central and important is one thing. Government also plays a role. There are provisions in the law on sexual harassment, and there needs to be greater awareness about what those are for this to be disseminated. There also have to be monitoring and enforcement, and when the enforcement happens, it has to be widely publicized so that people understand it is being taken seriously.
Senator Enverga: Thank you for the presentation. You mentioned earlier that you found out some issues with regard to certain factories in Cambodia and Bangladesh and you reported them to businesses. What were the reactions? Could you let us know, and have there been changes? What is normal? What are you doing right now? Are they doing the same thing?
Ms. Varia: Thank you for that question. We have been transparent in our research from the very outset. We wrote these companies as soon as we found any evidence that there were workplace abuses happening in their supply chain, and we found a pretty different response across the different companies.
For example, Adidas and H&M showed immediate concern about our findings and have been very cooperative in working with us to find ways to address these issues.
On the first count, one of the things we have recommended is that these companies disclose the names of their suppliers in their supply chain. Right now, it's very difficult to monitor for the abuse that is happening. For example, if we wanted to take a company and say we're going to do an investigation on what happens in their supply chain, it's difficult because we don't know the actual factories. The way we did the investigations is we went to the factories first, and we had to do a lot of investigative work and piece it together. We found the labels on the clothes that these workers were sewing, and we had to piece it together from the ground up. And that makes monitoring so much more difficult.
H&M and Adidas have agreed. They publicly disclose the list of their suppliers. Marks & Spencer has agreed to begin doing this next year. We recommended this to Joe Fresh and Loblaw, and they have yet to agree to that. We are having a discussion with them.
The second issue is the use of short-term contracts, and this violates Cambodian labour law. You cannot keep workers on short-term contracts for more than two years, and we found that many of these factories were violating that aspect of Cambodian labour law. Again, H&M and Marks & Spencer are looking into how to look at their orders and their relationships with these suppliers to find out. A lot of times, they did not even have the information about the use of short-term contracts, so it was understanding that they had to monitor and if it was being abused, then they had to work with their supplier to change that.
In terms of the pregnancy-based discrimination, we think this could be addressed in part by the use of longer-term contracts. It is usually exploiting that this worker is clearly pregnant, they're starting to show at five or six months, and then the employer would not renew the contract. We think the longer-term contracts will help to address the issue.
Senator Enverga: When did you tell this company about the issues that you just mentioned? Was it last year or a few years ago?
Ms. Varia: We initially sent out our findings in the spring of 2014. We had some dialogue with these companies throughout the summer. Just to reference Joe Fresh, they first responded to us in the fall of 2014. They did not have a very detailed response. For the most part, they said that their business and competitive interests precluded implementing several of our recommendations.
We published our final report on findings and recommendations in March of 2015; so it was a year after we had first alerted them to our concerns and given them an opportunity to respond. After that public release, I came to Toronto and was able to meet with representatives of Joe Fresh. They were much more open to discussing our recommendations. We're now waiting to see if they can take some further action on these recommendations, but we have yet to get any concrete commitments.
Senator Enverga: You were talking about Adidas earlier and another company where you recommended some actions. What percentage of the recommendations have they done after one year? Did you make any progress? Which ones were followed and which were not?
Ms. Varia: Adidas started to implement our recommendations very quickly after we first contacted them — I would say about three months later. They introduced an anti-retaliation clause into their code of conduct and their supplier agreements. They already had a policy where they were disclosing their supplier list. I don't have an exact percentage of which recommendations they implemented. They engaged with us substantively on our main recommendations and introduced this new anti-retaliation clause. We helped to introduce them to some of the labour advocates on the ground in Cambodia so that they were able to translate it, disseminate it among the workers and try to increase the use of their complaints mechanism. We thought that was a good model.
H&M last year began to implement some of the recommendations. They're taking the first step of surveying their suppliers to see which ones are using the short-term contracts. Now, they're coming up with a way to lower that proportion and make sure that they are abiding by Cambodian labour law. The other companies we're looking at really began to engage with us only after the report became public. That includes Gap, Armani and Marks & Spencer. We're trying to use the examples of what Adidas and H&M have done to encourage these other companies to follow suit.
Senator Enverga: Do you follow up with people who complained before? Do you go back to them and ask them what happened? Are you satisfied at this time? Is that how you have been doing it?
Ms. Varia: We are in close touch with a lot of the groups in Cambodia. We go back and forth and have a presence in Cambodia to be able to follow up. Yes, we do that to see whether they have noticed any changes in the actual factories where they are working and whether they have had direct contact with the brands, and what their relationship has been with them in terms of labour inspections. Yes, that's how we try to monitor what happens as time goes by.
Senator Eaton: Thank you very much for your presentation.
Does Human Rights Watch, as an international organization, work with governments? Do you go to the Cambodian or Bangladeshi government or the Canadian government and say, "Why don't you stop making Bangladesh a tariff-free zone?'' Do you get politically involved as well, or is that not within your scope?
Ms. Varia: Thank you for that question. We get involved in some ways and not in others. In terms of meeting and engaging with governments, that is always something we attempt to do. From the outset of our research in both of these countries, we write letters to the government and request meetings with the relevant ministries and officials to gather information and a get good picture of what is happening on the ground. In the same way that we try to engage with companies by sharing our findings and recommendations, we've done the same. The challenge is that sometimes these governments are not always receptive to us.
For example, in Bangladesh, particularly because we work on a range of human rights issues in the country, the government is not that open to dialogue with us as an institution because we are criticizing the government for extrajudicial killings and a number of issues; so they have not been that willing to engage. In Cambodia, we were able to meet at a senior level with the Ministry of Labour and Vocational Training and the Ministry of Commerce. One of the challenges there is getting things done. As well, conflicts of interest often occur between the labour ministry and the business sector, where there is significant financial interest that makes them reluctant to pursue some of our recommendations.
Senator Eaton: Are there any kind of labour associations there, or is all union activity forbidden?
Ms. Varia: Interestingly, it's very different in the two countries. Before I answer that question, I'll just say that we also engage with governments where many of these brands are headquartered. Actually, I was in Ottawa maybe a month ago and met with officials from the Department of Foreign Affairs and others to brief them on our findings and to share these recommendations.
In terms of the trading in activity, in Bangladesh fewer than 10 per cent of the garment workers are in unions or worker organizations. It's still a very difficult and hostile climate in which to join unions. Again, about the threats, I could read you some of the testimony, which is quite egregious with pregnant women being beaten and serious physical retaliation for forming unions.
In Cambodia it's quite different. You see that there are a number of unions, but many are government-controlled. The unions don't really represent the workers' interests. There is a very small space for independent unions to organize; and usually a lot of obstacles are put in their way to register. They may have to have a large number of workers — much higher than international standards — to be able to present an application to register. Then they have to present all these types of police certificates. There are many hoops they have to jump through, so it becomes very difficult for them to operate. You have different scenarios in the two countries.
Senator Eaton: We've heard that Myanmar is probably the next Bangladesh. Have you heard that the next cheap place to make garments will be there?
Ms. Varia: Yes, there is a lot of interest in Myanmar or Burma to be the next place. This is where we think that it's very important to take the lessons learned from Bangladesh and Cambodia to make sure the same mistakes are not repeated. In particular, there is not a strong history of workers organizing in Burma. We have to think about how there will be effective complaint mechanisms and effective labour monitoring.
One thing I've noticed overall in the garment sector is that there has been an increased reliance on the use of inspections as a way to ensure that workplace conditions are decent or to make sure that there won't be another factory fire the way there was in Bangladesh.
From my experience, those inspections are generally very weak. It's very difficult for an inspection team to come once a month or once every three months and really be able to uncover everything that's happening. Often what happens is that even if it's an unannounced inspection, they'll be kept at the gate for half an hour. One of the things we documented was child labour. Half an hour is enough for them to get the children out of the way and hidden from inspectors.
Inspections really have to be complemented by strong worker organizations because that's the only way workers feel empowered to raise complaints and have the assistance and support to see it through the process.
Senator Jaffer: My question is what should Canada be doing? There are all kinds of questions. One is that when these abuses happen maybe we should boycott the garments or the manufacturers of these garments and have sanctions against them or we should move to another country.
My bias is I don't want to do either of those things because I have met with those young women and I know that this is their livelihood. You do outreach. What would you advise us as to what Canada should do, or Canadian parliamentarians, to have these women have their jobs but have a better quality of life and, most important, security in the workplace? I know you have covered this, but can you expand on that please?
Ms. Varia: I'm very much in agreement that these jobs are very important and that what we would not want to see is pulling out of these countries or these factories because there's concern about the workplace conditions. Actually, we need a greater and deeper engagement to improve the conditions and to focus on remediation and improving the conditions. These jobs are important; they have a number of social and economic benefits beyond just providing these women jobs. They often have many health and education benefits for their families.
In terms of what Canada can be doing, one thing is much stronger engagement with Canadian companies around the measures they are taking for due diligence in their supply chains. Right now most of these codes of conduct or these due diligence practices are voluntary. In an ideal world we would like to see actual requirements, that it's not just a choice for those companies that have decided it's good for their image to be seen as socially responsible but actually a requirement.
One of those due diligence policies is to be transparent about their supply chains, to disclose who their suppliers are so that we can see a list of the 15 factories in Cambodia that supply this company and they can be adequately monitored.
The other thing is there are a number of initiatives at the international level where I think Canada is already playing a very constructive role, but for it to continue to do so. Canada is a contributor to the ILO's Better Work program, and this is really one of the best initiatives we've seen for monitoring factory conditions on the ground.
In Cambodia in particular, where there are a number of third-party inspectors, we found the Better Work program, the Better Factories Cambodia program, was really doing the best job in terms of monitoring, and we wanted to see it expanded. Right now they don't have the resources to expand to the subcontracting factories where the worst abuses happen. They are only monitoring the big, export-oriented factories and not the smaller suppliers. I think that continued and perhaps expanded support of the ILO's Better Work program would be great.
With the outcome of the G7 summit, the outcome documents were talking about transparency in the supply chain, about these due diligence procedures, about a vision zero fund and I think for Canada to play a leadership role in ensuring that these don't just remain nice words in a statement but actually have concrete implications on the ground would be critical.
Senator Jaffer: We had an earlier witness, Mr. Rahman, who is very knowledgeable about Bangladesh, and we really respect his work. He said something, and I hope I don't misquote him, like part of the issue is the responsibility of the consumer as well. If I am not mistaken, he said it's in our DNA to find the best bargain. There is not just the responsibility on the Canadian government, but there is also the responsibility on Canadians as to how we support workers, especially women, in the developing countries. You do this work, so can you talk to us as consumers about what we could be doing? What should we be demanding?
Ms. Varia: Consumers should demand information. My experience when we talk to different groups, when we talk to the public, is that when people know what the conditions are, nobody wants to be part of a process where the clothes they have bought have been made by exploiting somebody else's labour.
Part of the issue is that consumers often don't know the conditions in which their clothes are made. The first thing consumers need to do is demand information. They should know by looking at a label or by looking on a website that this company has met these label standards and we can be assured they have met these minimum standards. Right now that information is simply not available. It's not available to normal consumers, and it's not available to a group like Human Rights Watch that can spend months or years doing investigative work to find that out.
Consumers need to let these companies know that they care and that they're willing to spend more. It may mean an increased cost for some of their clothes. From more informal discussions, I think most people would be happy to spend what would usually be a matter of a few extra dollars to ensure that they are not contributing to a system that exploits workers because the primary motivation is to get the cheapest price on the sale rack.
Senator Jaffer: You do outreach on women's issues. I'm actually really confused; I have to do more work on this. I put this dilemma to you: It's on compensation. First I thought there was $30 million in the bank to be given out to victims, but after hearing from Mr. Chant of Loblaw, I didn't understand if the money was in the bank or if it was committed, but he says $10 million has been disbursed and $20 million is still to be disbursed.
Are parents or families whose children or parents died being compensated? Are people who were hurt being compensated? Are people who were injured being compensated? How is the compensation scheme working?
Ms. Varia: Let me just check. Most of my focus has been on Cambodia, and my colleagues have done this work.
Senator Jaffer: If you don't know this now, you can give it to us later. I'm putting you on the spot, and I don't mean to do that.
Ms. Varia: I will send you the response because I know this is something they looked into.
One of the issues is that a lot of the compensation has gone to the most high-profile victims, which are those of the Rana Plaza factory fire. However, there was another factory fire with Tazreen Fashions, and so there are people who have greatly suffered, and families who have lost one of their members who haven't received access to any compensation whatsoever. That's one of the issues: Not everybody who has been affected by these workplace disasters has access to compensation.
I know there are a lot of concerns about whether the compensation has been enough. I will check with my colleagues and get back to you on exactly how they're distributing it among the families and for those who are dealing with injuries or disabilities as a result.
Senator Jaffer: In your answer, if you are able — I don't mean to have you do a lot of work, but it would help us.
Ms. Varia: I would be happy to.
Senator Jaffer: Thank you. If you are able to please tell us if just the people with direct compensation are only on the Rana collapse or if it is also the two fires. From what I understand, people who were involved in the fires earlier on have not been compensated.
I'm not asking you a question, but if you can find out exactly who has been compensated, it would really help our work moving forward on corporate social responsibility to get an idea on the ground as to how the compensation package is working out. That would really help us. Thank you very much.
The Deputy Chair: Could I add to that? We have heard that 135 people's DNA was not found. Will those families be compensated?
Have you looked at factories in other parts of Asia? When I was in Vietnam recently, at the airport I saw a huge shipment of garments — I won't say the company's name — which was being shipped to North America, Canada, I don't know where. Have you looked at them, the recent fire in the Philippines? Have you looked at workers' rights in those places?
The other thing I would like you to give me an update on is the Better Work program. What is it? How did it come to be, and who is involved in that?
Ms. Varia: I will check with my colleagues about those 135 individuals whose DNA was not matched.
In terms of other countries where we are working, we have not done any work in Vietnam. For us, access is difficult, as an NGO, to work there. We don't have the freedom to operate there freely.
In terms of the Philippines, we do some monitoring. We haven't done an in-depth investigation the way we have in Bangladesh and Cambodia, but we have been trying to be in touch about what's happened there.
I can check. I remember that they checked into what happened with that factory fire or what happened there, but it was something that we ended up feeling we were not going to do a deeper investigation into, so I can find out the reason why.
The ILO's Better Work program, especially in the case of Cambodia, the idea was to try to create a model of what good labour inspections could look like and to learn from the experiences of companies as they try to address these issues, to provide training to companies and technical assistance to them around what could be important components of their company policies, their supplier contracts, and to do the inspections, and then after such inspections take place, to provide advisory services. It's not just, "You've gotten this inspection, and we found these problems, so just fix it,'' but to actually really help guide and provide support to those companies: "Here are the actions you could take. This is who you might need to hire. Here are some training modules that we have prepared that you could use.'' It's a very hands-on support to companies to addressing these issues.
It's not perfect, but we have found that they've been doing a good job of identifying some of the most serious abuses. For example, in their inspections in Cambodia, they found out that 94 per cent of the factories they were looking at used forced overtime. Partly it came about as the U.S. and the EU were giving preferential status to Cambodia and to Bangladesh, and they knew that there was going to be this surge in expansion of their garment sectors. There was this agreement with the ILO to come up with this program to also introduce safeguards for workplace conditions at the same time.
That's a bit of how it came about.
Senator Nancy Ruth: A couple of us have been to the Gildan factory in Bangladesh outside of Dhaka, and we had them testifying here today. They seem to be a pretty high industry standard. I wonder if you would concur with that, and do you use that as an example when talking to governments or other manufacturers, that they look at the kind of audits and workplace standards and wages and health and education that Gildan does?
Ms. Varia: I would need to check with my colleagues who have focused on the Bangladesh work. I have been more involved in our Cambodia work.
I can say that we have not been using them as an example. I would have to see if there is any particular reason for that. It's not one that my Bangladesh colleagues have shared with us as one that we should share.
Senator Nancy Ruth: Is there a company that you saw in Cambodia or heard about in Bangladesh that you would want to use as a model?
Ms. Varia: What we have found out so far is that even for the companies with the best practices, it's not that they're able to eliminate all of the labour abuses in their factories, but it's a question of how quickly did they identify it and how quickly do they respond. These are very complex environments on the ground, and I think that a lot of these changes will take some time to actually really be able to guarantee the types of conditions that we all think are critical to have.
In that case, I don't have the names of actual suppliers, but in terms of the brands, especially with Adidas, we keep on using them as an example, in their response, of the due diligence procedures that they're putting in place to prevent as many of these workplace abuses as possible, and then how they respond, having effective complaint mechanisms, following up with workers on the ground. Having a presence on the ground makes a really big difference.
There are definitely shared factors that we see that can be indicators where there might be greater problems versus others. One of them is when most of the sustainability or CSR folks are in headquarters and there is not a strong presence on the ground. It's very important to have a physical presence on the ground where suppliers are to really improve the quality of monitoring and to respond to any problems that are identified.
Senator Jaffer: I have a question regarding the auditing and inspecting of factories. Is it sufficient? We heard about the Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety. Which is more effective? Do you see a change or is it just words? I'm not judging. I just want to know, because we're not on the ground.
Senator Nancy Ruth and I saw this Gildan factory, and we were impressed, but we don't have much to compare it with. Are the current systems more effective than they were previously?
Ms. Varia: I think there is definitely a feeling that conditions have improved in comparison to the past. Whether they are adequate for what's necessary, important changes still need to be made, and there are many changes that may be there in the law but have yet to be implemented.
In terms of inspections, some of the improvements, the number of labour inspectors has quadrupled, and that is a good thing because before there literally wasn't the capacity to even inspect those factories. There has been some progress.
In terms of how well those inspections are done, and are they really finding all the problems that are taking place, the answer to that is no, that it's very easy for factories to learn that there is going to be an inspection and to pretty things up before inspectors come.
There is also a lot of corruption. At least in the case of Cambodia, we interviewed labour inspectors who were candid with us in saying they were paid off to give favourable labour inspections. When you're working in countries where that type of corruption is pretty widespread, that's something that has to be addressed as well.
I think inspections are important. The fact that we have seen an expansion is good, but how to ensure their quality and how to ensure that they're complemented by other enforcement mechanisms is important, that they should just be a part of the solution and not the whole solution; and enforcement of the labour laws, having a space for workers to organize and protest; and to have direct channels to the brands. Sometimes they may not be able, realistically or practically, to complain to their factory management. They should also have direct channels to complain to the brands that are part of international companies and may have a better response.
The Deputy Chair: I have one final question. Last week we heard from Barry Laxer of Radical Design Limited, who emphasized the living wage as opposed to the minimum wage. He emphasized the workers' ability to purchase food, for example, in addition to establishing health and safety standards in the workplace. Would you support the case for a living wage, and has Human Rights Watch done any work in the area?
Ms. Varia: We would absolutely support a living wage. The minimum wage is often the bare minimum. When you have people who are working from morning until night, every day, and they are not able to meet their basic necessities, that's of great concern. You look at how low the wages are. Again, in Cambodia, they just had an increase from $80 a month to $100 a month, and that's really not enough to meet a lot of the basic necessities. That's why you will find that many of the workers wish to perform many hours of overtime, every day, because their actual wage is simply insufficient. This is something that we do support.
The Deputy Chair: Seeing no other questions, I want to thank you, Ms. Nisha Varia, for your time. As you can see, there was a lot of interest. Maybe in the future we will be talking to you again.
Senators, there is some other business that I would like to deal with.
Senator Jaffer: Can I move a motion that if the Syrian report is not able to be tabled before the Senate rises, that we table it with the Clerk at a later date?
Senator Eaton: I second the motion.
Senator Jaffer: By explanation, we may not be able to finish the complete report and we may need to table it late.
The Deputy Chair: Agreed?
Hon. Senators: Agreed.
Senator Jaffer: Thank you.
The Deputy Chair: Thank you, senators.
(The committee adjourned.)