Supplier assessment for labour practices and human rights 

A significant percentage of the own brand fashion products – 96 per cent – are manufactured in areas classified as risk countries by the BSCI. We are aware that there is a risk of violation of the Code of Conduct and we are actively working to ensure compliance. Our risk analysis, based on Amnesty’s identification of risks for the textile industry, shows five areas of risks for the Code of Conduct. 

Risk analysis

Management systems

Problems with the management system may lead to poor control over procedures at the factory or with subcontractors. There may be a lack of people responsible for the management system or a lack of internal policies in the factory. We put emphasis on giving advice and assisting factories to improve their management systems and on training factory managers to establish internal controls over their supplier chain.

Documentation

Shortcomings concerning copies of employees’ ID cards, or wage lists, or other documentation are a common problem. Lack of proper documentation hampers the verification of compliance with the code, such as paying the correct wages, checking worker age and respecting overtime limits. If the documentation is insufficient, the supplier is deemed as not having complied with the requirements. We work to alert suppliers to the importance of good documentation through seminars and workshops, and by providing training for responsible persons at the factories. 

Trade union affiliation

The right to join a trade union and to engage in collective bargaining is a basic right that we uphold. Unfortunately, in many of our production countries the trade unions are weak and the underlying causes are complex and often multifaceted. In many of the factories that we use, there are functioning workers’ committees that give the employees the opportunity to engage in dialogue with the factory management. These committees are in no way equivalent to a functioning trade union, and are not seen as a replacement. Having the opportunity to join a trade union and engage in collective bargaining is the primary goal, but establishing trade unions remains the workers’ own responsibility. Stockmann is responsible for putting pressure on the supplier to ensure that this right is not violated. Factory employees are informed of their rights through the BSCI policies that are placed visibly at the workplace. We encourage factory managers to take part in BSCI training related to the freedom of association and collective bargaining.

Wages and compensation

Paying incorrect wages is a common problem. In compliance with the Code of Conduct and local law, suppliers must pay the country’s statutory minimum wage to their employees as a minimum requirement. This is not enough, however, since the minimum wage is seldom at a sufficient level to cover basic needs and also provide some discretionary income. We think that it should be possible to live on the wage earned by a factory worker. We believe that raising the national minimum wage is the key to raising wage levels, as it also raises wages on higher pay grades. In Bangladesh, we have co-operated with other companies in appeals to the Bangladeshi government to raise the minimum wage.

Stockmann does not own any factories or production facilities of its own, and is typically a minor buyer in the eyes of its suppliers and their factories. As a consequence, we cannot, only by our own efforts, raise the salaries of factory workers. For example, an increase in the buying price is not directly linked to the wages paid to the workers, and cannot be expected to benefit the workers without separate proof of this. We urge the supplier to provide fair compensation and improve welfare through benefits such as child care, free lunches, transport, and the opportunity for education on health and finances – which we implement through the ‘Health Enables Return (HER)’ project. The wages paid is a factor considered in the supplier scorecard, and those suppliers with the best scores receive more orders than the others.

We work with the question through BSCI but also by benchmarking other initiatives. We actively follow the discussion on the living wage, participate in round-table discussions and other initiatives on the issue – such as the Better Work, Fair Wage Network by the Fair Labour Association and various other round-tables and consider new ways of addressing the issue.

Working hours

Overtime work that exceeds the limits in the Code of Conduct is a widespread problem in most of our production countries. Overtime work is difficult to remedy as there are several reasons for it. Firstly, the employees in the factories may say that they want to work overtime in order to earn more money. In cases where the employees work far away from home, they want to be able to work a lot over an intensive period and then return home. Secondly, it may be lucrative for the supplier to organise overtime in order to increase production. Stockmann’s as other fashion companies’ lead times represent a risk of overtime. In order to minimize the risk, a production capacity assessment is conducted prior to placing orders.

Correcting a human rights violation

In the case of a human rights violation, we work together with the supplier to remediate the victim. No new orders are placed until the violation has been corrected and the victim has been compensated. Over the years, there have been cases where a child under the minimum working age has worked in a factory producing our products, and thus we have a method that has been developed together with Save the Children for dealing with such a situation. The factory is responsible for compensation and for paying a salary to ensure the child can attend school instead of, for example, moving to another factory to work. The factory management meets with the parents of the child to solve the issue. If possible, and in order to ensure that the family has sufficient resources, an adult member of the family is employed to replace the child.