Ethical Sourcing Audits - The "On The Ground" Reality
What the Auditor Saw.
The elimination of the global quota system on textiles is expected to drive a growing share of the world's clothing production to Chinese factories. However, a notable challenge, is that more than half of the factories that auditors see in China are thought to be forging some of their records in violation of ethical sourcing standards so that irregularities including underpayment, inadequate health and safety provisions and excessive hours can be disguised.
In fact, particularly in industries where workers are paid piece rates, its not uncommon for the actual wage in China to be half the legal minimum wage.
Of Chinese factories Nike's 2004 ethical sourcing report, said:
"Falsification of information by factories often related to wages and hours of work is common. This extends to the practice of coaching workers by factory managers trying to deceive compliance auditors".
Reportedly inside a footwear company in Guangzhou a sign reminds managers of the different working hours per week required by different customers: "Please educate the workers well to avoid telling the client the truth" says the sign.
An article in the Financial Times reported that a garment factory manager in Guangdong said he had tasked a team to create a bogus paper-trail of documents for foreign customers.
Some of his team punched bogus time cards, whilst another falsified payroll records indicating that Chinese labour laws (which stipulate a 40 hour working week with a maximum of 36 hours of overtime per month) were being complied with. The laws in China are more stringent than in some countries, and require workers to be paid at least 1.5 times the normal wage for overtime.
Your Own Ethical Sourcing Programme ?
Feel free to get in contact if you want to discuss implementing an Ethical Sourcing Programme (ESP) in your organisation.
© www .interim-management-purchasing.co.uk December 2012
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