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Accounting for the Gaps in Labour Standard Compliance: The Role of Reputation-Conscious Buyers in the Cambodian Garment Industry

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Abstract

Working conditions in global supply chains have come under increased public scrutiny. Faced with this growing demand for accountability, some multinational enterprises have come to play regulatory roles in developing countries where they do business. This article combines quantitative and qualitative methods to examine the effects of reputation-conscious buyers on supplier labour standard compliance in the Cambodian garment sector. Using unique factory-level panel data, this article shows that factories producing for reputation-conscious buyers are associated with better compliance levels than other factories, controlling for factory characteristics. Field-based interviews also demonstrate that reputation-conscious buyers regulate supplier compliance both ‘reactively’ and ‘proactively.’ The findings shed light on the opportunities and limits of buyer-driven regulation.

L’attention du public est de plus en plus attirée par les conditions de travail dans la chaîne de valeur globale. Certaines firmes multinationales en viennent à jouer un rôle de régulation dans les pays où se situent leurs activités afin de répondre à cette exigence de responsabilité. Cet article combine des méthodes quantitatives et qualitatives dans le but d’examiner les effets des comportements « responsables » des acheteurs quant au respect des normes du travail par les fournisseurs dans le secteur du vêtement au Cambodge. A partir de données de panel originales au niveau de l’entreprise, cet article démontre que les entreprises produisant pour des acheteurs soucieux de leur image respectent mieux les normes internationales du travail que les autres entreprises, et ceci en utilisant les caractéristiques des firmes comme variables de contrôle. Des entretiens effectués sur le terrain soulignent également que les acheteurs soucieux de leur image ont un rôle de régulation vis-à-vis du respect des normes par les fournisseurs que ce soit grâce à leurs initiatives ou à leurs réactions. Les résultats mettent en évidence à la fois les opportunités et limites de la régulation par les acheteurs.

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Notes

  1. For more information about the ILO monitoring programme, consult their website: http://www.betterfactories.org

  2. The ILO monitoring programme has been mostly financed by international donors, namely the US Department of Labor, USAID, The World Bank, the Agence Française de Développement, as well as by the Cambodian Government, the Garment Manufacturers Association of Cambodia (GMAC) and international buyers. As the programme seeks to be self-sustaining beyond 2010, the financing scheme is set to change.

  3. The category of labour relations is not included in the analysis because the problem of clustering distorts true compliance performance.

  4. Recently, it is increasingly acknowledged that compliance is a limited measure of actual working conditions given the prevalence of audit fraud such as double-book keeping (Barrientos and Smith, 2007). Moreover, monitoring fundamental rights, including freedom of association, discrimination, child labour, remains a difficult task. Despite these challenges, ILO monitoring results in Cambodia's garment sector are the most comprehensive and reliable industry-wide data available on the general state of working conditions in garment factories.

  5. The number of MSI buyers sourcing from the same factory is small, and thus this variable is highly correlated with the presence variable (>0.89), which is why it is dropped from regression analysis.

  6. Factory management can also learn from training. The ILO provides various training on labour standards and human resource management to factories on a voluntary basis. As it is beyond the scope of this paper, this avenue may be explored in future work.

  7. Figures from GMAC.

  8. Although the types of unions may have made the difference for the outcome, data limitation precludes further investigation. ILO (2006) finds that independent unions are more helpful for workers than government-supported unions.

  9. Interview with union federation leader, CCAWDU, 10 September 2007.

  10. The agreement is available from the website of the ITGLWF: http://www.itglwf.org/DisplayDocument.aspx?idarticle=15317&langue=2.

  11. Interview with training expert, 12 September 2008.

  12. Interview with WRC investigator, 4 September 2007.

  13. The WRC investigation report on this case is available from their website: http://www.workersrights.org/Freports/Update_Dec2006.asp#PCCS.

  14. Interview with general manager, PCCS Garment, 21 June 2008.

  15. Interview with WRC investigator, 4 September 2007.

  16. Interview with union federation leader, CCAWDU, 10 September 2007.

  17. Interview with union federation leader, FTUWKC, 26 September 2007.

  18. Interview with official, Department of Occupational Safety and Health, 21 September 2007.

  19. Interview with the Gap representative, 24 June 2008.

  20. Interview with H&M representative, 16 October 2008.

  21. Interview with factory manager, 11 September 2008.

  22. Interview with factory manager, 16 September 2008.

  23. Interview with factory manager, 21 June 2008.

  24. Interview with factory manager, 14 October 2008.

  25. Interview with factory manager, 21 June 2008.

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Acknowledgements

Author thanks Mr Tuomo Poutiainen, Chief Technical Advisor of ILO Better Factories Cambodia (BFC) for support and provision of data, BFC staff for various support and interviewees for their generosity. She also thanks Rafael Gomez and anonymous referees for helpful comments on previous drafts of this article.

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  1. Department of Management, London School of Economics, London

    Chikako Oka

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Oka, C. Accounting for the Gaps in Labour Standard Compliance: The Role of Reputation-Conscious Buyers in the Cambodian Garment Industry. Eur J Dev Res 22, 59–78 (2010). https://doi.org/10.1057/ejdr.2009.38

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