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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Monday, August 28, 2006

Improved working conditions create a win-win story in Asia’s factories

The Island: 28/08/2006"

Asia’s ability to sustain its impressive economic growth and competitive edge will depend greatly on the ability of governments and companies to ensure the benefits are shared by employers, the workforce and the wider population. This is the conclusion of a new report 1/ on the region’s economic and social trends, prepared for the Asian Regional Meeting of the International Labour Organization. ILO Online reports on one new approach which, by linking productivity with improved working conditions, is ensuring that the benefits of globalization are felt from the shop floor to the boardroom.

The Chien Thang Garment Company in Hanoi, Vietnam may not be a household name, but it produces clothing for labels such as Gap, JC Penny, C&A, Yessica, and Zara. About 95 per cent of the company’s production is exported. Almost 40 years of experience in making clothes and leather goods and a network of 10 factories employing 3,200 people, put this state owned enterprise in a good position to make the most of the opening up and growth of Vietnam’s economy.

But when the buyers from Hong Kong (China), United States, the Republic of Korea and the European Union initially came calling, Chien Thang hit problems. Inefficiencies in the established production processes brought frequent stoppages. Although suitable for simple garments like trousers and shirts, the structure of the production lines could not cope with the complex garments that the foreign buyers demanded for their customers, some of which need 80 or 90 separate processes to complete. In 2004, the management and workers at Chien Thang got a lucky break. The company was selected to join the pilot scheme of the Factory Improvement Programme (FIP), a programme designed and developed by the International Labour Organization (ILO), the UN agency dealing with work and workplace issues.

The FIP was developed following an extensive study into codes of conduct and the supply chains of multinational companies 2/. The research highlighted the need to integrate the competitive and business goals of a factory with the social priorities of its workers, as well as the importance of systems for feedback, making improvements and remedying problems.

The FIP was developed in 2002, with the support of the Swiss State Secretariat for Economic Affairs and the United States Department of Labor. The programme was specifically designed to assist factories producing goods for global supply chains. A particular strength of FIP is that it links quality and productivity with labour practices and health and safety, thereby ensuring that improvements made in a factory are felt all the way down to the shop floor.

The programme was first implemented in Sri Lanka in 2002. The initial phases focused on the garment industry, an important export sector, and particular emphasis was placed on upgrading the working environment to reduce the physical strain on workers and other associated health risks. The results were impressive, and quantifiable. An external review of the programme found that, on average, in-line quality rejects were cut by over 40 per cent, while turnover and absenteeism fell by 26 per cent and 34 per cent respectively.

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