Trade Unions, NGOs, and Corporate
Codes of Conduct

Lance Compa

Corporate codes of conduct on workers rights and labour standards hold out a third way to promote labour rights in the global economy. Advocates argue that codes of conduct can harness the market power of informed consumers to halt abuses against workers in developing countries. Many supporters see such codes as a civil society alternative to "first way" government regulation or "second way" trade union organizing and collective bargaining to protect workersí rights.

Governments cannot possibly inspect every workplace and catch every lawbreaker, goes the argument. And trade unions face a worldwide crisis of organizing and bargaining, especially in sweatshop industries. Codes of conduct offer a new option through private sector self-regulation using civil society vigilance. And like cereal boxes on a supermarket aisle, a daunting variety of worker rights codes of conduct have entered the public policy marketplace in just the past two years ñ the Fair Labour Association (FLA), the Workers Rights Consortium (WRC), Social Accountability 8000 (SA8000), the Ethical Trading Initiative (ETI), the Clean Clothes Campaign (CCC) and more.

These "stakeholder" codes involve a combination of company officials, trade unionists, human rights activists, religious leaders, consumer and community organisations and other social forces. They succeed an earlier generation of company codes of conduct issued by Levis, Reebok, Nike, The Gap and others, which collapsed because of the inherent incredibility of corporate self-regulation.

But like Third Way politics generally, with its talk of putting a human face on free-market efficiencies, the substance behind the rhetoric on this new generation of corporate codes of conduct is open to question. Are consumer awareness and potential reaction enough to punish workersí rights abusers or reward workersí rights respecters? Can private policing, even by the best-intentioned NGOs, really protect workersí rights and raise labour standards in a sustained way? Perhaps most challenging, will a rush to corporate codes of conduct undermine effective labour law enforcement by governmental authorities and undermine workersí power in trade unions?

The proliferation of corporate codes of conduct generates both alliance and tension between trade unions and NGOs that deal with workersí rights in the global economy. Alliance, because trade unions and NGOs share a common desire to halt abusive behavior by multinational companies and a broader goal of checking corporate power in the global economy. Tension, because unions and NGOs have differing institutional interests, different analyses of problems and potential solutions, and differing ways of thinking and talking about social justice in the global economy.

Alliances . . .

Their alliance is strongest when unions and NGOs target the most virulent forms of exploitation, like child labour, gender discrimination, unsafe conditions and firing, jailing, or killing union organizers in factories in developing countries. A global supply chain of subsidiaries, contractors, subcontractors and sub-subcontractors has taken shape in export processing zones around the world. Employers in these enclaves exploit cheap, abundant, usually female labour in what is often called a global assembly line.

Many of these factories serve household-name companies. Their image, often conveyed by a logo, a slogan, or a famous spokesperson, is these companiesí strongest marketing tool. But the image can also be an Achillesí heel if consumers are made aware of abusive practices in factories that producing the goods they purchase. In the United States, trade unions and NGOs have collaborated in consumer awareness campaigns targeting Nike, The Gap, Wal-Mart, Disney, Liz Claiborne and other well-known firms, and personalities like TV star Kathie Lee Jordan (with a big splash) and basketball star Michael Jordan (with barely a ripple).

UNITE, the U.S. apparel workersí union, first joined the International Labour Rights Fund, the Lawyers Committee for Human Rights, the Consumer Federation of America and other U.S.-based NGOs along with Nike, Reebok, Levi Strauss, Liz Claiborne and other firms, in an effort sponsored by the Clinton administration and then-Labor Secretary Robert Reich called the Apparel Industry Partnership. But UNITE pulled out of the partnershipís Fair Labor Association (FLA) when union officials thought the NGOs were cutting a deal behind their back ñ deal they thought was a bad one, with allegedly weak language and enforcement measures.

While they left the FLA, UNITE and other union officials still join officials from Toys 'R Us, Avon Products, and the Dole Food Company in the SA8000 program, which cheerfully proclaims that ëbeing socially responsible is as easy as 1, 2, 3: adopt high standards, implement your policy, and measure your performance.í

European trade union, NGO and corporate spokespersons make up Europe's ETI and CCC campaigns. Students initiated the WRC linking trade unionists, firms and universities in a code of conduct requiring disclosure of factories making goods bearing the universityís name. A myriad of social ëlabelingí and product-specific codes for soccer balls, toys, coffee, carpets and so on has also taken shape, usually with trade union, NGO and enterprise involvement.

Some trade unions are incorporating NGO concerns into their own advocacy programs in a move toward ësocial unionismí, not just bread-and-butter business unionism. Likewise, NGOs are becoming increasingly sensitized to labor concerns. But shared goals, strategies and tasks do not erase differences. The new movement for corporate codes of conduct has also generated tensions between unions and NGOs that must be squarely faced.

And tensions . . .

Some trade unionists believe in a ëseparate-but-cordialí relationship with NGOs so as not to dilute laborís goals with those of other groups. Others are more open to coalitions, but think unions should have a ëfirst-among-equalsí role because they are the most universal, representative, membership-based organizations, while NGOs are all over the lot in terms of membership accountability.

NGOs question leadership claims by the labor movement. They prefer a more horizontal ëone-among-equalsí arrangement for coalition work. Many NGOs see themselves as the focus of a new emphasis on "civil society" in international discourse that should give them equal status with trade union movements. And they point out that union formation is notably lacking among informal sector workers, women workers, and export-oriented factories where the effects of globalisation are most pernicious and where NGOs are most active.

But with stable organisations and dues-paying members, unions have a ready answer to the question ñ who do you represent? One can quibble over delegate elections versus direct elections of union leaders, but as elected leaders their capacity to speak for their members is accepted.

The situation for NGOs is far more complex. No single organisation speaks authoritatively for the NGO community. NGOs are troubled by the question ñ who elected you? A query sometimes put by trade unionists. Some NGOs have a membership base and elect board members and officials, but many more are answerable only to a board of directors. Their funding is often sporadic and crisis-driven, or they tailor their projects to ones funders will support, in contrast to regular union dues.

Elements of class antipathies can also come into play. Many NGOs are composed mainly of middle and upper class intellectuals and professionals with a lingering perception of labor unions as a special interest group devoted to protecting their own members' jobs and wages at the expense of the larger society. In turn, unionists, including labor's own intellectuals, are often suspicious of ëdo-goodersí in non-labor groups, however allied, who presume to tell the labor movement what it ought to do without ever having passed through the crucible of an organizing campaign, hard-nosed collective bargaining, or a strike to understand what workers are up against.

Even the term 'NGO' is unhelpfully vague. While it usually implies the side of the angels, NGOs range across a long spectrum of funding sources, membership involvement, and willingness to confront corporate power. "Civil society" is another phrase that evokes images of earnest, engaged citizens, when it really includes an infinity of left, center, right and fringe groups.

In the end, NGO's legitimacy rests on the quality of their work and their effectiveness as advocates. Many have achieved deserved legitimacy in the eyes of governments and of society precisely because of the quality of their research, reporting, and advocacy. Still, many trade unionists believe that while NGOs may rightly take the lead on issues like land mines, torture, genocide, the international criminal court and other human rights crises, labour should lead on workersí rights in the global trading system.

Hidden agenda, Northern agenda

Each of the new "stakeholder" codes of conduct holds itself out as a model, jealously promoting its mission and criticizing, openly or implicitly, efforts under rival codes. In the midst of it all, most unions still see strong laws effectively enforced, along with self-organisation and collective bargaining, as the best ways to advance workersí interests. For them, corporate codes of conduct should be seen not as a third way alternative but as a third way supplement to labour law enforcement and collective bargaining.

Many trade unionists suspect that behind the new enthusiasm for codes of conduct and related monitoring plans is an agenda aimed at replacing altogether the bargaining and representational role of trade unions and their effectiveness in the political arena. Some see the real goal of corporate backers of codes of conduct as the destruction of strong, class-based workersí organisations that can organize and bargain and back up their demands with the power to strike. In their place would be scattered, small, resource-starved NGO monitors whose only clout lies in ad hoc public relations campaigns consumers will soon grow tired of.

Workers, unions and NGOs in many developing countries have additional criticisms. For many of them, the movement for codes of conduct is a peculiarly Northern phenomenon. Some Northern advocates have been embarrassed by reports that codes of conduct long in the making at home took years to be translated into the languages of workers in developing countries covered by the codes. Even after they are translated, some codes have been rarely disseminated to workers.

The FLA and SA8000 have been fashioned and refined in Washington, D.C. and New York, not in Tegucigalpa and Jakarta. The ETI and CCC are driven from London and Amsterdam, not from Sao Paulo and Nairobi. The WRC had to scramble to mend fences when claims of extensive consultation with developing country NGOís amounted, under examination, to just a few phone calls and e-mail exchanges.

Many Northern advocates adamantly oppose a monitoring role for international accounting firms or other corporate-oriented social auditors. Others oppose monitoring even by Northern-based NGOs or unions, insisting that only indigenous, locally-based NGOs and unions should monitor codes of conduct. But some of the early monitoring experience using this model only reinforced tensions between unions and NGOs. It turns out that problems of experience, knowledge, legitimacy, capacity, resources, stability, hidden agendas, turf rivalries and others marking NGOs in any country afflict NGOs in developing countries, too.

Monitoring challenge

Two mid-1990s cases well-known among activists illustrate labour-NGO tensions and the less-than-ideal effects of ëindigenousí monitoring. They involved the Mandarin apparel factory (Gap supplier) in El Salvador and the Kimi factory (a source for many large U.S. retail companies) in Honduras. At first, when workers supporting unionisation were fired, U.S. unions and NGOs launched publicity campaigns in the United States that helped get many workersí jobs back. These efforts also led to improvements in some of the worst working conditions, such as forced pregnancy testing , denial of washroom privileges, and poor ventilation.

But follow-up monitoring activity by local NGOs sparked suspicions that the NGOs were supplanting the unionsí role as worker representatives by discussing wages and working conditions with factory managers. Union leaders were also worried that having NGOs apply codes of conduct exempted government labour inspectors from enforcing national labour laws.

At Mandarin the original union was challenged by a new, larger rival that it viewed as a company-sponsored ploy using codes of conduct as a cover. Mark Anner, an American living in El Salvador who was trusted by everyone (he was nearly killed in a death-squad bombing of a union office several years earlier), became a de facto mediator working to disentangle proper roles for unions and NGOs at the factory before the monitoring program could get traction.

At Kimi a respected medical doctor with many years of experience fighting military abuses in Honduras investigated workersí complaints about wage violations and unfair treatment by supervisors. On paper this reflected the monitoring model most often promoted by NGO advocates in the North: a local human rights advocate who speaks the language and is trusted by workers, not a remotely-based NGO or a corporate accounting firm. First-world NGOs eagerly awaited the chance to launch a new pressure campaign based on findings by a model monitoring mechanism.

But this human rights leader had no experience in collective bargaining or in workplace issues. He emerged from a meeting with management agreeing that workers had to increase productivity and work more diligently before wages could be improved and before supervisors could ease their discipline. Management snowed him with arguments that trade unionists are used to hearing and refuting, but which were new and plausible to him. The union at Kimi then focused on the collective agreement and on enforcing Honduran labour laws, not the code of conduct the company had agreed to follow. The Kimi factory closed last year.

Circular squad

Even within the NGO community there are disputes about the adequacy of codes of conduct and polemics that sometimes resemble a circular firing squad. Thus, for example, NGOs involved in the Fair Labour Association split over that mechanism's monitoring system and its approach to ëliving wageí and country eligibility requirements. Denouncing the FLA and the NGOs that remained in it has become a standard agenda item for other NGOs, even when many of them are involved in alternate schemes, like SA8000 or the Ethical Trading Initiative, that are not fundamentally different and that themselves come under attack from yet other NGOs as sellouts to corporate power.

Reminiscent of left-sectarian politics, charges fly that the FLA is dominated by corporations. That SA8000 is a marketing ploy. That the ETI and the CCC are reporting systems with no enforcement. That the WRC is a ëgotchaí scheme with no plan for engaging producers in a systematic change of behavior.

At the end of this chain of denunciation are NGOs that stake out an absolute no-compromise position. They see their role as keeping the heat on corporations through public exposure and denunciation rather than negotiation for ameliorative codes of conduct, since any negotiation requires some measure of compromise with the hated corporate adversary.

Finding a balance

In many ways these disputes about what is a reasonable compromise and what is a sellout reflect similar disputes about labour clauses in trade agreements: whether to compromise on ëside agreementsí or other instruments that may not contain every goal, or to denounce any compromise as a sellout if it fails to achieve every goal. But at this still-early stage of experiments with new labour-NGO alliances, more patience and less vitriol are in order. None of the codes or monitoring system has been fully implemented. At this stage, allowing for a variety of experiments and approaches to see what works and what fails, without falling into mutual recriminations, is a more fruitful approach for a labour-NGO coalition than denouncing some perceived weakness in each othersí language or monitoring procedures.

To advance workersí rights in the global economy requires strong regulation and enforcement nationally and internationally. Domestic labour law reform is key. So is an expanded role for the International Labour Organisation, as well as new labour rights linkages to trade agreements. Trade sanctions against abusive countries and firms are an important tool. Workersí rights also rely on strong trade unions that can organize, bargain, and strike effectively.

Given union's weak presence in the global assembly line and the rapid-response capabilities of many NGOs, compared with union bureaucracies, codes of conduct are a valuable asset. The challenge is to find the right balance of national and international legal mechanisms, trade union power, and codes of conduct. The institutional tensions and differences examined here complicate efforts by unions and NGOs to collaborate for social justice in the global economy. But problems should not block progress. The two communities still have more in common with each other than either has with corporations, governments, or international organisations that see free trade and free-flowing capital as the solution to low labour standards. At the same time, unions and NGOs need to be clear-eyed about their differences and their proper roles as they navigate the opportunities and challenges that lie ahead.

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