Graduation Project (SA 8000 & it's frame work for Indian Apparel Manufacturing)
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Graduation Project (SA 8000 & it's frame work for Indian Apparel Manufacturing)



The document describes the condition of social regulations in apparel manufacturing industries at Bangalore.

The document describes the condition of social regulations in apparel manufacturing industries at Bangalore.



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Graduation Project (SA 8000 & it's frame work for Indian Apparel Manufacturing) Document Transcript

  • 1. 11. INTRODUCTIONIndustrialization is the major trend in developing countries. But industrialization is a result ofa complex socio-economic organisation. In today‘s fast changing global market, it is not onlythe quality of garments which is cherished by the retailers and manufacturers but also theworking environments of the organization wherein the products were produced. Indianapparel industry seems to have become one which is taking issues of ethical sourcing andresponsible business quite seriously. Given the pressure from consumers in the west upontheir service providers and brands to source and produce ethically and that, in turn, translatinginto demands from Indian manufacturers to adhere to certain laid down rules and regulations,the humane side of business has assumed substantial importance. Issues of workers‘ rightsand their welfare too have come into the ambit of ―the responsibility of businesses‘‘.Aberrations on these accounts are not easily tolerated and companies which default on thesesensitive issues have a huge price to pay in terms of loss of face and of course, business.The eagerness among apparel manufacturers in India to be socially compliant has gone up inthe last few years. According to data available with us, WRAP certifications alone haveshown an upward swing. In 2006, nearly 58 companies had been certified under WRAP. Andin 2008, the figure has apparently crossed the 100 mark.1.1. STATEMENT OF THE STUDY“Companies in a competitive world know that if they want to survive in the market today, theyhave to ensure compliance of some threshold issues, which are called as red flags. Beside theeagerness of Indian Exporters, social compliance certifications are still a challenge. SocialCompliance is one of the significant types of Non Tariff Measures (NTM’s) imposed by majorimporters of Indian Apparels” (Gordhan K Saini, December 2009)1.2. SIGNIFICANCE OF THE STUDYThe human side of business has gained substantial importance. Ethics, values, issues ofhuman rights and sensitivity to environmental issues is not just necessary for enhancing thebuyers‘ perception about the company. These are also important for inclusive growth.Working culture and environment affect labour productivity. Aberrations on these accountsare not easily tolerated and companies which default on these sensitive issues have a hugeprice to pay in terms of loss of face and of course, business.
  • 2. 2Recent surveys show that a large and growing number of consumers and investors areinfluenced in their decisions by a companys social and environmental performance. How acompany addresses these concerns affects their profits and access to financing. (SocialCompliance)Leading companies are pushing to integrate social compliance into their sourcing activities.Gap, Inc. is using an integrated supplier scorecard that measures a suppliers compliance levelas well as its business performance. Otto Group, Europes largest catalogue retailer, isincluding a social compliance rating along with measurements for delivery, quality and price.(Social Compliance)We know that Indian exporters have lost significant business due to failure in complianceaudits and certifications. These certifications also ensure the ethical practices & workingenvironments.The US blacklisted India from engaging in apparel business in 2010, due bad performance inExecutive Order List 13126. Apparel exporters will risk losing clients like Next, GAP,Reebok, Primark and Nike if India fails to convince the US that its industry does not employchildren. (Shramana Ganguly Mehta, 2011)Absenteeism and operator‘s productivity are the most concerned issues at production floor.Improved culture and environment will motivate the operators and contribute towards tosolve those issues. Thus it will also contribute towards improved overall productionefficiency.“There is a need to rope in those who source garments from India in the process. The CSRand sourcing teams within the various brands need to be more in sync. There is also a need tounderstand the hidden costs of compliance and the role of importers and buying agents indriving up the cost and complexity of compliance”- Chandrima Chatterjee, Director, AEPC, India
  • 3. 31.3. PURPOSE OF THE STUDYThis study will focus on identification of factors responsible for being most popularcertification, SA8000, for Social Accountability among Exporters of India. We will try to findout the gap between SA8000 standards and Indian Labour Laws. Thus this report will servethe purpose of the analysis of SA 8000 and its adaptability to Indian Labour Laws for IndianApparel Exporters in Bangalore.This study aims to explore local-level experiences of SA8000 in Garment ManufacturingIndustries of Bangalore by analysing the impacts on business practices and workingenvironment. The analysis of the potential benefits may drive some organizations toimplement & sustain these standards.1.4. OUTLINEChapter one sets out the scene and formulates the purpose of the study. Chapter twoelaborates the concepts of ‗NTM‘, precedence of Social compliance & its evolution. It alsodiscusses the present scenario of NTMs for RMG sector in India. Chapter three focus on theconcept of ‗Social Compliance‘ and its background. In this chapter, various initiatives,standards and certifications have been overviewed, followed by the comparison of SA8000with WRAP and BSCI. Further in this chapter, the Indian exports scenario of the sector hasbeen discussed. Chapter four provides some insights on ‗SA8000‘. Chapter five provides theunderstanding of the certification process, while chapter six provides the status & statistics ofSA8000 certification. Chapter seven discuss the methodology to carry out the study. Chaptereight is about the hypothesis based on the ‗Literature Review‘, while from chapter nine &onwards the actual scenario regarding SA8000 & social compliance at large has beendiscussed.1.5. LIMITATIONS OF THE STUDYi. Due to time constraints & proximity, the study has been focused only few region ofthe Bangalore RMG Cluster, this may lead some sampling error.ii. We have to go through management systems of the facilities to carry out the study,which takes the flexibility and some control away from us, due to that we were notable to carry out the free discussion with labours.iii. Due to unavailability of all required data in public domain, we were not able to gatherall relevant information.
  • 5. 52. NON TARIFF MEASURESRecent trade negotiations have addressed measures that restrict or distort international tradein goods. Tariffs are the more commonly known obstacle to trade flows, but OECD is alsoactive in identifying and analysing non-tariff measures (NTMs) - less apparent restrictions onthe free flow of trade. (Trade- Non Tariff Measures)With lowering of Tariffs across the globe, NTMs becomes into more focus. Members startedto concentrate on these measures to erect the supply/entry barriers for trades (goods &services). Developed countries are the more prolific user of these measures to keep outdeveloping countries exports.Although identification and analyses of non-tariff measures (NTMs) has significantlyevolved, understanding their nature, extent and trade effects remains a challenge for analystsand policymakers.2.1. DEFINITION OF NON TARIFF MEASURES“Non Tariff Measures (NTMs) are all measures other than normal tariffs namely traderelated procedures, regulations, standards, licensing systems and even trade defencemeasures such as anti-dumping duties etc which have the effect of restricting trade betweennations.” Department Of Commerce, Ministry of Commerce & Industry,Government of India (Non Tariff Measures)“Non-Tariff Measures (NTMs) are policy measures, other ordinary custom tariff that canpotentially have an economic effect on international trade in goods, changing quantitiestraded, or prices or both” MAST, United Nations Conference on Trade and Development(Definition, Classification (and collection) of NTMs, 2009)2.2. HISTORY OF NTMs/ NTBsNTMs have been a concern since the birth of the General Agreement on Tariffs and Trade(GATT). The GATT drafters included general rules covering some of these measures, such asArticle XI on the general elimination of quantitative restrictions. (Marc Bacchetta andCosimo Beverelli, WTO CONSULTANTS)
  • 6. 6Despite having a long period of existence/use, the NTMs came into special attention in early70‘s (Quinn J. and Slayton P, 8-10 May, 1980) when the discussion of NTMs was explicitlyscheduled in the framework of Tokyo Round of the GATT negotiations. This round wasattended by 102 member countries. (The GATT years: from Havana to Marrakesh).Conducted between 1973 and 1979, the Tokyo Round continued GATTs efforts toprogressively reduce tariffs. These efforts resulted into the decrease on the average tariffs ofmanufactured products from 40 % (at the starting of GATT) to 4.7% with one third cut incustom duties in the world‘s main nine markets. (The roots of the WTO). The understandingof NTMs has come along with the gradual reduction on Tariff barriers which helped thegrowth of NTMs and its importance.2.3. TYPE OF NTMsThere are six major types of NTMs, which are in existence of current trade scenario of world.(Non Tariff Measures, 2012)Specific Limitations on TradeQuotas.Import Licensing requirementsProportion restrictions of foreign to domesticgoods (local content requirements)Minimum import price limitsEmbargoes
  • 7. 7Customs andAdministrative EntryProceduresValuation systemsAnti-dumping practicesTariff classificationsDocumentation requirementsFeesGovernment Participation inTradeGovernment procurement policiesExport subsidiesCountervailing dutiesDomestic assistance programsStandardsStandard disparitiesIntergovernmental acceptances of testing methodsand standardsPackaging, labeling, and marking
  • 8. 8According to the United Nations Conference on Trade and Development (UNCTAD)classifications there are approximately 100 different codes, representing various non-tariffmeasures. (Indicators of Tariffs and Non-Tariff Trade Barriers, 1997)2.4. NTMs & INDIASince 1991, India has begun gradually liberalising its economy and dismantling barriers totrade and investment. Although the reform process is incomplete, India has been able todevelop a diverse production base with the helped of developing country standards. This hassupported India to increase export and helped to open to foreign direct investment. This basehas been dominated by resource-based and low-technology products for which global demandis somewhat stagnant. There is also a small set of high skill and technology products withconsiderable export potential. Following the Asian currency crisis in mid-1997 andinternational recession, there is an emerging perception that non-tariff measures in overseasmarkets may adversely affect the countrys export growth. These measures are likely to affectChanges On ImportsPrior import deposit subsidiesAdministrative feesSpecial supplementary dutiesImport credit discriminationVariable leviesBorder taxesOthersVoluntary export restraintsOrderly marketing agreements
  • 9. 9the whole range of Indian exports. (Non-Tariff Measures affecting Indias Exports - ExecutiveSummary)Now to manage NTB/ NTMs India arrange the required database in the following ways: Country Wise Product WiseSeveral surveys and studies have been carried out to establish proper channel for encounter ofNTMs. A study has recommended the government of India to encourage the private provisionof certain services required to improve the capabilities of enterprises to respond positively toNTMs, in such areas as consultancy services, testing and certification facilities and qualitycontrol issues. It also suggested the Government to make SMEs in particular more aware ofthe importance of compliance issues. (Non-Tariff Measures affecting Indias Exports -Executive Summary)According to a recent study by ICRIER, the database can be managed according to thefollowing categorization: Electric & Electronic products Pharmaceuticals products Product Specific requirements in the US Product specific requirements in the EC State Specific requirements in the US State specific requirements in the EC NTBs in the Gulf Cooperation Council (GCC).
  • 11. 113. SOCIAL COMPLIANCEThe concept of ethical business is not a new one. But after 90‘s, due to liberalisation,increased concerns over the impacts of globalisation has led to new demands of corporationsto play a central role in the human aspect of business, achieve equitable and accountablesystems of governance and ensure social as well as environmental security.In essence, the approach is to view business as part of society and to find ways to maximisethe positive benefits that business endeavour can bring to human and environmental well-being whilst minimising the harmful impacts of irresponsible business. These agendas arenow a day‘s known as ‗social accountability‘ for Corporate Social Responsibilities.”I honestly believe that the winning companies of this century will be those who prove withtheir actions that they can be profitable and increase social value — companies that both dowell and do good… Increasingly, shareowners, customers, partners and employees are goingto vote with their feet — rewarding those companies that fuel social change through business.This is simply the new reality of business — one that we should and must embrace.”- Carly Fiorina, Chairman and Chief Executive Officer, HP(Abira Chatterjee, 2008)A recent article enlightens the need of various approvals, certifications and compliances,regarding to society and labours, for the continuous flow of business. (Ram K Navratna,2011) These certifications are subjected to continuous audits by the internal and externalagencies.3.1. DEFINITION OF SOCIAL COMPLIANCE “Result of conformance to the rules of social accountability by the extendedorganization including not only the organizations own policies and practices but alsothose of its supply and distribution chains. It is a continuing process in which theinvolved parties keep on looking for better ways to protect the health, safety, andfundamental rights of their employees, and to protect and enhance the community andenvironment in which they operate.” (Social Compliance)
  • 12. 123.2. SOME MAJOR GLOBAL STANDARDS & CERTIFICATION PROGRAMS FORSOCIAL & ETHICAL COMPLIANCE (MSMEs role in Enterprise SocialResponsibility)These standards / certifications emphasize on rules of social accountability that addresshealth, safety and fundamental rights of the enterprises‘ employees and other stakeholders.The main purpose of such certifications is to protect and enhance the community and theenvironment and fight ills like child labour, forced labour, occupational hazards anddiscrimination.3.2.1. SA 8000It is a global social accountability standard for decent working conditions, developed andoverseen by Social Accountability International (SAI). It contracts with a global accreditationagency, Social Accountability Accreditation Services (SAAS) that licenses and overseesauditing organizations to award certification to employers that comply with SA8000.Figure 1: Various Social Compliance Standards
  • 13. 133.2.2. BSCIBusiness Social Compliance Initiative is the common European platform of retailers, industryand importing companies for monitoring and improving social standards in supplier countriesfor all consumer goods. Audits within the BSCI can be conducted in any production facilityworldwide. The type of articles covered by the BSCI varies widely – soft goods, clothing,home textiles, small appliances, toys, and accessories. (Home)3.2.3. WRAPWorldwide Responsible Accredited Production is a certification program for manufacturers.WRAP is an independent, non-profit organization dedicated to the certification of lawful,humane and ethical manufacturing throughout the world. WRAP apparel certification is nowa requirement by most garment retailers in the U.S. A WRAP certification is widely acceptedby retailers, brand managers, licensers, as evidence that your facility is socially responsible.(Home)3.2.4. ETHICAL TRADE INITIATIVEETI promotes responsible corporate practices that observe national and international LabourLaws. Recognized by almost all UK retailers, ETI combines practical focus with balancedlabour rights perspectives. ETI must adhere to a code of labour practices based on keyconventions of ILO as well as a set of general principle determined by country and businesstype.3.2.5. AA 1000It provides a basis for designing, implementing, evaluating and assuring the quality ofstakeholder engagement by organizations. It is developed by AccountAbility, a not-for-profitBritish organization. (aa1000)3.2.6. OHSAS 18000It is an international occupational health and safety management system specification thatwas developed to cater to the health and safety obligatory needs of enterprises in an efficientmanner. This specification comprises of two parts: (What Are OHSAS 18001 and 18002) OHSAS 18001 that specifies assists in controlling health and safety risks. OHSAS 18002 that highlights procedures for implementation and registration.
  • 14. 143.2.7.ECS 2000It is issued by the Business Ethics Research Project, Reitaku Center for Economic Studies,Reitaku University. Corporate ethical standards systemically specify the development ofmanagement systems to ensure ethical practices.3.2.8. ISO 26000 or ISO SRIt is a family of standards, under development, which will provide guidelines for socialresponsibility that will be applicable to any business regardless of its size, location or income.3.3. COMPARISON OF VARIOUS SOCIAL ACCOUNTABILITY STANDARDSTable 1: Comparison of SA8000 & WRAP (Phoebe Clark, November, 2007)PARAMETERS SA8000 WRAPType of organisation Multi-stakeholder organization ofNGO, trade unions and privatesector representatives.Organisation of 700companies.Reference forstandards with ILOconventionsAdhere to all ILO conventions Only comply with them.Minimum Age (childlabour)15 years. (13-15 year odds to workunder certain conditions- no morethan 2 hours work in a day)14 years.Freedom ofassociation andcollective bargainingRequire management to allowworkers to join trade unions andbargain collectively. Also requires factorieslocated in countries wherethese are restricted tofacilitate parallel means ofemployee organisation.Require management toallow workers to join tradeunions and bargaincollectively.
  • 15. 15Working Hours 48 hours a week and overtime nomore than 12 hours72 hours a week or 14 hoursa day.Minimum Wage As cited in ILO Minimum WageFixing Convention 131As local minimum wage.Health & Safety Requires basic emergency exit plans,fire extinguishers, warnings signs ondangerous machines, personalprotective equipments, first aid,access to clean water and cleantoilets, ergonomic seating, and ahealth and safety committee ormanagement structure. A system to ensure continualimprovement.Same but don‘t require afactory to have any systemfor improvement.Management Devotes an entire principle tomanagement system.Are not as detailed as SA8000.Suppliers,Subcontractors, andHome-WorkersEncourage and enforce compliancein the supply chain.Does not provide its auditorswith methods to verifycompliance.Registration Charge only for its guidancedocument for US$ 100.Register online and pay feeof US $895. Get certification innext 6 months or payanother US $895.Other Does not cover environmentalstandards, custom laws and securityregulations.Also cover those areas.
  • 16. 16Table 2: Comparison of SA8000 & BSCIPARAMETERS SA8000 BSCI (Code Of Conduct, 2009)Type of organisation Multi-stakeholder organizationof NGO, trade unions andprivate sector representatives.Developed by Foreign TradeAssociation. (BSCIINFORMATION SHEET)Legal Compliance Adhere to all ILO conventions Applicable laws and regulations,industry minimum standards, ILOand UN conventions and any otherrelevant statutory requirementswhichever requirements are morestringent.Minimum Age (childlabour)15 years. (13-15 year odds towork under certain conditions-no more than 2 hours work in aday)According to ILO and UNconventions and/or national lawsFreedom ofassociation andcollective bargainingRequire management to allowworkers to join trade unionsand bargain collectively. Also requires factorieslocated in countrieswhere these arerestricted to facilitateparallel means ofemployee organisation.Require management to allowworkers to join trade unions andbargain collectively. In accordance with ILOconventions 11, 87, 98, 135and 154Working Hours 48 hours a week and overtimeno more than 12 hours.According to national law butshould not exceed 48 hours a weekand overtime no more than 12hours.Minimum Wage As cited in ILO Minimum Shall meet or exceed legal
  • 17. 17Wage Fixing Convention 131 regulations and industry standards.Health & Safety Requires basic emergency exitplans, fire extinguishers,warnings signs on dangerousmachines, personal protectiveequipments, first aid, access toclean water and clean toilets,ergonomic seating, and ahealth and safety committee ormanagement structure. A system to ensurecontinual improvement.In accordance with ILOconventions 155, 184 and ILOrecommendations 164 and 190 System to detect, avoid orrespond potential threatsshall be established.ManagementSystemsDevotes an entire principle tomanagement system.Also ensures that suppliercompany shall define andimplement a policy for socialaccountability.Integral parts of this Code OfConduct Declarations of the suppliercompany Terms of implementation Consequence of noncomplianceRegistration Fee Charge only for its guidancedocument for US$ 100.According to annual turnoverCertifications Yes No (Producers Information Sheet-Get Started with BSCI)Applicability Any organisation Company having annual turnoverabove 500,000 Euros. (Sevices
  • 18. 18And Fee, 2011)Other Does not cover environmentalstandards, custom laws andsecurity regulations.Covers for waste management,handling and disposure ofchemicals and other dangerousmaterial, emissions and effluenttreatments.Also covers anti-bribery and anticorruption policy.3.4. SOCIAL COMPLIANCE & INDIAN APPAREL EXPORTERSIndian exports has seen decline from last three years. USA and EC have been major importersfor Indian apparel manufacturers.Several reasons were considered to be responsible for that like: Recession Increase Labour/production cost etc. Doubt about the work environment and other compliance standards.
  • 19. 193.4.1. INDIAN APPAREL EXPORTS3.4.1.1. 61 ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNITTEDOR CROCHETEDTable 3: Contribution of Apparels to Indian Exports- (EXPORT IMPORT DATABANK Version 6.0 - TRADESTAT, 2012)COMMODITY 2009-2010%SHARE2010-2011%SHARE%GROWTHARTICLES OFAPPAREL ANDCLOTHINGACCESSORIES,KNITTED ORCORCHETED.21,77,661.74 2.5755 21,71,796.69 1.9007 -0.27Indias TotalExport8,45,53,364.38 11,42,64,897.18 35.14Table 4: Indian Apparel Export (Commodity: 61 ARTICLES OF APPAREL ANDCLOTHING ACCESSORIES, KNITTED OR CORCHETED)SR.NO.COUNTRY VALUES INRS. LACKS2008-2009VALUES INRS. LACKS2009-2010VALUES INRS. LACKS2010-2011GROWTHIN 10-111 AUSTRALIA 7,093.16 10,583.53 14,380.79 35.882 BELGIUM 47,248.58 45,690.63 65,696.63 43.793 CANADA 68,060.38 60,867.32 56,156.17 -7.744 DENMARK 34,233.25 31,325.42 33,603.54 7.275 FINLAND 12,516.36 11,103.18 11,673.91 5.146 FRANCE 1,87,229.21 1,54,301.46 1,31,861.47 -14.547 GERMANY 3,18,027.48 2,77,506.84 2,18,811.27 -21.158 IRELAND 31,533.39 29,002.78 9,802.30 -66.29 ITALY 1,17,768.27 1,14,004.18 97,626.82 -14.3710 KAZAKHSTAN 10,153.15 9,157.73 11,944.75 30.4311 MEXICO 17,307.79 10,984.98 14,962.89 36.21
  • 20. 2012 NETHERLAND 91,973.42 83,035.54 79,925.91 -3.7413NETHERLANDANTIL4,652.36 5,249.58 16,470.44 213.7514 OTHERS 1,33,402.19 1,36,935.20 1,48,022.07 7.4915PANAMAREPUBLIC7,874.89 5,078.94 12,042.72 137.1116 POLAND 11,428.24 8,871.50 10,096.39 13.8117 SAUDI ARAB 42,612.82 34,563.57 39,742.93 14.9918 SINGAPORE 12,006.00 10,686.87 16,114.35 50.7919 SOUTH AFRICA 18,703.76 22,696.67 21,539.99 -5.120 SPAIN 77,565.35 87,806.28 78,258.66 -10.8721 SWEDEN 17,994.43 15,797.77 15,235.96 -3.5622 SWITZERLAND 38,167.80 14,987.25 12,462.38 -16.8523 TURKEY 9,029.52 5,824.28 9,331.24 60.2124 U ARAB EMTS 1,68,748.54 1,79,333.88 2,32,194.50 29.4825 U K 2,83,020.49 2,60,406.14 2,07,326.03 -20.3826 U S A 5,58,061.56 5,51,859.92 6,06,512.29 9.9TOTAL 23,26,412.39 21,77,661.44 21,71,796.40 -0.27Graph 1: Indian Apparel Exports during last 3 years23,26,412.3921,77,661.44 21,71,796.4020,50,000.0021,00,000.0021,50,000.0022,00,000.0022,50,000.0023,00,000.0023,50,000.002008-2009 2009-2010 2010-2011VALUE(Rs.LACKS)YEAR
  • 21. 21Graph 2: Country wise % share of Indian Apparel ExportGraph 3: Country wise 3 year analysis of Indian Apparel ExportAUSTRALIA1% BELGIUM3%CANADA3%DENMARK2%FINLAND1%FRANCE6%GERMANY10%IRELAND0%ITALY4%KAZAKHSTAN1%MEXICO1%NETHERLAND4%NETHERLANDANTIL1%OTHERS7% PANAMAREPUBLIC1%POLAND0%SAUDI ARAB2%SINGAPORE1%SOUTHAFRICA1%SPAIN4%SWEDEN1%SWITZERLAND1%TURKEY0%U ARAB EMTS11%U K10%U S A28%0.002,00,000.004,00,000.006,00,000.008,00,000.0010,00,000.0012,00,000.0014,00,000.0016,00,000.0018,00,000.0020,00,000.00VALUE(Rs.LACKS)COUNTRY2010-20112009-20102008-2009
  • 22. 22Graph 4: Country wise increase or decrease % for Indian Apparel ExportFrom the above graphs we can conclude that Indian apparel export is losing its base fromIndia. It may be of because of certain reasons.Table 5: 5 year analysis of Indian Apparel Exports to USA (Commodity: 61ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNITTED ORCORCHETED)2006-2007 2007-2008 2008-2009 2009-2010 2010-2011Values inRs. Lacs5,07,939.07 4,87,396.33 5,58,061.56 5,51,859.92 6,06,512.29%Growth -4.04 14.5 -1.11 9.9Totalexport ofcommodity16,37,171.50 17,20,644.81 23,26,412.67 21,77,661.73 21,71,796.69%Growth 5.1 35.21 -6.39 -0.27%Share ofcountry31.03 28.33 23.99 25.34 27.93-100-50050100150200250GROWTH(%)COUNTRY
  • 23. 23Totalexport tocountry85,36,848.54 83,38,806.93 96,45,841.97 92,41,651.34 1,16,36,247.86%Growth -2.32 15.67 -4.19 25.91%Share ofcommodity5.95 5.84 5.79 5.97 5.21Graph 5: Comparative analysis of last 5 years of Indian Apparel Exports to USAIn 2009-10, we can see that a little decline of graph than 2008-09. This was the period whenUS put India in Executive Order List 13126 for child labour instances. (Shramana GangulyMehta, 2011)5,07,939.074,87,396.335,58,061.56 5,51,859.926,06,512.290.001,00,000.002,00,000.003,00,000.004,00,000.005,00,000.006,00,000.007,00,000.002006-2007 2007-2008 2008-2009 2009-2010 2010-2011VALUE(Rs.LACKS)YEAR
  • 24. 24Table 6:5 year analysis of Indian Apparel Exports to UK (Commodity: 61 ARTICLESOF APPAREL AND CLOTHING ACCESSORIES, KNITTED OR CORCHETED)2006-2007 2007-2008 2008-2009 2009-2010 2010-2011Values in Rs.Lacs1,56,757.68 1,95,947.97 2,83,020.49 2,60,406.14 2,07,326.03%Growth 25 44.44 -7.99 -20.38Total exportof commodity16,37,171.50 17,20,644.81 23,26,412.67 21,77,661.73 21,71,796.69%Growth 5.1 35.21 -6.39 -0.27%Share ofcountry (1 of3)9.57 11.39 12.17 11.96 9.55Total exportto country25,42,129.00 26,96,748.35 30,34,457.97 29,47,631.02 32,52,144.69%Growth 6.08 12.52 -2.86 10.33%Share ofcommodity (1of 6)6.17 7.27 9.33 8.83 6.38
  • 25. COMMODITY: 62 ARTICLES OF APPAREL AND CLOTHINGACCESSORIES, NOT KNITTED OR CORCHETED.Table 7: Indian Exports (62 ARTICLES OF APPAREL AND CLOTHINGACCESSORIES, NOT KNITTED OR CORCHETED)COUNTRY VALUES INRS. LACS2008-2009VALUES IN RS.LACS2009-2010VALUES INRS. LACS2010-2011GROWTHFOR 10-11AUSTRALIA 20,294.97 21,564.02 19,791.79 -8.22BELGIUM 60,456.65 55,033.61 69,657.74 26.57BRAZIL 14,074.99 16,204.56 16,606.38 2.48CANADA 55,319.62 52,612.63 53,042.92 0.82DENMARK 74,038.24 82,867.80 85,711.77 3.43FRANCE 1,77,003.21 1,84,255.67 1,74,578.06 -5.25GERMANY 1,98,476.09 2,24,644.33 2,60,012.69 15.74HONG KONG 9,179.54 9,432.48 12,929.37 37.07IRELAND 7,501.10 13,648.20 14,491.84 6.18ITALY 86,486.45 81,309.29 85,975.72 5.74JAPAN 56,590.61 57,587.31 56,422.24 -2.02KUWAIT 13,583.73 17,901.53 13,057.72 -27.06MALAYSIA 20,157.10 29,190.70 21,484.42 -26.4MEXICO 17,128.33 17,901.99 21,442.49 19.78NETHERLAND 1,05,218.78 1,08,602.19 1,15,119.08 6SAUDI ARAB 73,368.40 84,160.26 71,318.70 -15.26
  • 26. 26SINGAPORE 13,487.11 21,562.32 19,126.15 -11.3SOUTHAFRICA14,665.27 16,535.87 18,772.27 13.52SPAIN 1,52,953.05 1,69,799.89 1,67,847.85 -1.15SWEDEN 31,990.04 40,604.58 43,261.36 6.54TANZANIAREP18,875.23 14,977.40 13,552.58 -9.51TURKEY 18,861.23 20,223.41 24,373.54 20.52U ARAB EMTS 2,66,508.23 2,80,786.86 2,47,054.05 -12.01U K 3,10,918.18 3,47,297.62 3,69,257.67 6.32U S A 6,89,862.29 7,08,373.82 6,92,378.81 -2.26OTHER 2,05,556.89 2,28,469.51 2,47,839.03 8.48Total 27,12,555.33 29,05,547.85 29,35,106.24 1.02Graph 6: 3 year analysis Line Diagram for Indian Apparel Exports (HS CODE 62)0.005,00,000.0010,00,000.0015,00,000.0020,00,000.0025,00,000.00VALUE(Rs.LACKS)COUNTRY2010-20112009-20102008-2009
  • 27. 27Graph 7: % Share of each countryGraph 8: % Growth of each country for 10-11AUSTRALIA, 19,791.79BELGIUM, 69,657.74BRAZIL, 16,606.38CANADA, 53,042.92DENMARK, 85,711.77FRANCE, 1,74,578.06GERMANY, 2,60,012.69HONGKONG, 12,929.37IRELAND, 14,491.84ITALY, 85,975.72 JAPAN, 56,422.24KUWAIT, 13,057.72MALAYSIA, 21,484.42MEXICO, 21,442.49NETHERLAND, 1,15,119.08SAUDI ARAB, 71,318.70SINGAPORE, 19,126.15SOUTHAFRICA, 18,772.27SPAIN, 1,67,847.85SWEDEN, 43,261.36TANZANIAREP, 13,552.58TURKEY, 24,373.54U ARABEMTS, 2,47,054.05U K, 3,69,257.67U S A, 6,92,378.81OTHER, 2,47,839.03-40-30-20-1001020304050GROWTH(%)COUNTRY
  • 28. 28Graph 9: Comparison last 3 years of non knitted & crotched articles A recent study shows that in 2009, total 56 orders of T&C got rejected due to failureof NTMs. (Gordhan K Saini, December 2009) . The study also shows the distributionof various NTMs.Figure 2: Types of NTMs by cases27,12,555.3329,05,547.8529,35,106.2426,00,000.0026,50,000.0027,00,000.0027,50,000.0028,00,000.0028,50,000.0029,00,000.0029,50,000.0030,00,000.002008-2009 2009-2010 2010-2011VALUE(Rs.LACKS)YEAR
  • 29. 29It has been estimated that more than 100 million children worldwide are employed as fulltime labours. The vast majority is in Asia, Africa, South America and most of them areengaged in apparel, toy making & handmade carpet industry. Garment manufacturing consistsof several small activities, which need little or no skill. Child labours are engaged in thoseactivities. (K N Chatterjee and Suman Bhattacharya, December, 2007)In Tamil Nadu, girls and young women are employed on a large scale to work in the garmentindustry. The tradition of employing young girls is locally known as ‗Sumangali Scheme‘-introduced by textile and garment manufacturers about 10 years ago in Coimbatore andTirupur districts. An academic survey reveals that 10-20% of these workers aged between 11-14 years. They are also being forced to work 12 hours a day at the daily wage of Rs 60/-.Among them 60% belongs to ‗schedule caste‘ and they also face several labour rightviolations. SOMO and ICN are international NGO working towards the human right issues.(SOMO and ICN, 2011)This report concluded that India Exporters are not maintaining the ethical business. Thisdeclines the image of Indian Exporters in multinational brand like GAP, PUMA etc.
  • 30. 30SA8000
  • 31. 314. SA8000The SA8000 standard and verification system is a credible, comprehensive and efficient toolfor assuring humane workplaces. Social Accountability 8000 (SA8000) has been developedby Social Accountability International (SAI), known until recently as the Council onEconomic Priorities Accreditation Agency.SA8000 is promoted as a voluntary, universal standard for companies interested in auditingand certifying labour practices in their facilities and those of their suppliers and vendors. It isdesigned for independent third party certification.4.1. PURPOSE & INTENTThe intent of SA8000 is to provide a standard based on international human rights norms andnational labour laws that will protect and empower all personnel within a company‘s scope ofcontrol and influence, who produce products or provide services for that company, includingpersonnel employed by the company itself, as well as by its suppliers/subcontractors, sub-suppliers, and home workers. Based on the principles of international human rights norms as described inInternational Labour Organisation conventions, the United Nations Convention on theRights of the Child and the Universal Declaration of Human Rights. (Corporate SocialResponsibilty- News & Resources) Verifiable through an evidenced-based process. (Social Accountability 8000, 2008) Apply universally regardless the size of organisation, geographic location or industrysector.Complying with the requirements for social accountability of this standard will enable acompany to: Develop, maintain, and enforce policies and procedures in order to manage thoseissues which it can control or influence; Credibly demonstrate to interested parties that existingcompanypolicies, procedures,and practices conform to the requirements of this standard.
  • 32. 324.2. EVOLUTION & HISTORYRising public concerns about unethical working condition at working places in developingcountries led to the establishment of Council on Economic Priorities Accreditation Agency in1997 (K N Chatterjee and Suman Bhattacharya, December, 2007) to draw up a universal codeof practice for labour conditions in the manufacturing industries. Standard was first published in 1997 and subsequently revised in 2001. After that it was revised in 2008. The transition period of SA 8000:2001 was 1 year. After 2009, no certification againstSA 8000:2001 was considered as valid. (IQNet Ltd POLICY ON THE TRANSITIONTO SA 8000:2008, 2008) The nine Social Accountability Requirements remain the same – no additionalsections have been added, and no existing ones have been removed. However, somehave been modified, based on the experience of users of the standard since 2001.4.3. SOCIAL ACCOUNTABILITY INTERNATIONALSAI is a non-governmental, multi-stakeholder organization whose mission is to advance thehuman rights of workers around the world. It partners to advance the human rights of workersand to eliminate sweatshops by promoting ethical working conditions, labour rights, corporatesocial responsibility and social dialogue. Works to protect the integrity of workers around the world by building local capacityand developing systems of accountability through socially responsible standards. Established one of the worlds preeminent social standards- the SA8000®standard fordecent work, a tool for implementing international labour standards.o Improved the lives of over a million workers in 65 countries. SA8000 guides employers to consider the importance of each job and to recognize theequal dignity of each person involved in the supply chain - from the worker to theretailer to the consumer. SA8000 standard leverages the power of business and consumers to purchase productsmade from workplaces that enrich, not denigrate, the livelihoods of people.
  • 33. 33 Provided training to over 20,000 people, including factory and farm managers,workers, brand compliance officers, auditors, labour inspectors, trade unionrepresentatives and other worker rights advocates. (About Us)SAI recognizes that voluntary compliance standards are only one part of what is needed toraise labour law compliance around the world. To that end, SAI has developed locally-grounded programs, such as Project Cultivar, to work on the broader context surroundingcompliance. The goal of these programs is to build an enabling environment for labour rightsby: Strengthening local capacity and leadership to support employer compliance effortsand enable worker participation; Promoting social dialogue as a foundation for sustainable change; and Connecting government enforcement with incentive-driven voluntary compliance.4.4. NORMATIVE ELEMENTS AND THEIR INTERPRETATIONThe company shall comply with national and all other applicable laws, prevailing industrystandards, other requirements to which the company subscribes, and this standard. When suchnational and other applicable laws, prevailing industry standards, other requirements to whichthe company subscribes, and this standard address the same issue, the provision mostfavourable to workers shall apply.The company shall also respect the principles of the following international instruments: ILO Convention 1 (Hours of Work – Industry) and Recommendation 116 (Reductionof Hours of Work) ILO Conventions 29 (Forced Labour) and 105 (Abolition of Forced Labour) ILO Convention 87 (Freedom of Association) ILO Convention 98 (Right to Organise and Collective Bargaining) ILO Conventions 100 (Equal Remuneration) and 111 (Discrimination – Employmentand Occupation) ILO Convention 102 (Social Security -Minimum Standards)
  • 34. 34 ILO Convention 131 (Minimum Wage Fixing) ILO Convention 135 (Workers‘ Representatives) ILO Convention 138 and Recommendation 146 (Minimum Age) ILO Convention 155 and Recommendation 164 (Occupational Safety and Health) ILO Convention 159 (Vocational Rehabilitation and Employment -Disabled Persons) ILO Convention 169 (Indigenous and Tribal Peoples) ILO Convention 177 (Home Work) ILO Convention 182 (Worst Forms of Child Labour) ILO Convention 183 (Maternity Protection) ILO Code of Practice on HIV/AIDS and the World of Work Universal Declaration of Human Rights The International Covenant on Economic, Social and Cultural Rights The International Covenant on Civil and Political Rights The United Nations Convention on the Rights of the Child The United Nations Convention on the Elimination of All Forms of DiscriminationAgainst Women The United Nations Convention on the Elimination of All Forms of RacialDiscrimination4.5. DEFINITIONS Definition of company: The entirety of any organisation or business entity responsiblefor implementing the requirements of this standard, including all personnel employed bythe company. Definition of personnel: All individual men and women directly employed or contractedby a company, including directors, executives, managers, supervisors, and workers.
  • 35. 35 Definition of worker: All non-management personnel. Definition of supplier/subcontractor: An organisation which provides the company withgoods and/or services integral to and utilised in or for the production of the company‘sgoods and/or service. Definition of sub-supplier: A business entity in the supply chain which, directly orindirectly, provides the supplier with goods and/or services integral to and utilised in orfor the production of the supplier‘s and/or the company‘s goods and/or services. Definition of corrective and preventive action: an immediate and continuing remedy toa non-conformance to the SA8000 standard. Definition of interested party: An individual or group concerned with or affected by thesocial performance of the company. Definition of child: Any person less than 15 years of age, unless the minimum age forwork or mandatory schooling is stipulated as being higher by local law, in which case thestipulated higher age applies in that locality. Definition of young worker: Any worker over the age of a child, as defined above, andunder the age of 18. Definition of child labour: Any work performed by a child younger than the age(s)specified in the above definition of a child, except as provided for by ILORecommendation 146. Definition of forced and compulsory labour: All work or service that a person has notoffered to do voluntarily and is made to do under the threat of punishment or retaliation,or is demanded as a means of repayment of debt. Definition of human trafficking: The recruitment, transfer, harbouring or receipt ofpersons, by means of the use of threat, force, other forms of coercion, or deception for thepurpose of exploitation. Definition of remediation of children: All support and actions necessary to ensure thesafety, health, education, and development of children who have been subjected to childlabour, as defined above, and have been subsequently dismissed.
  • 36. 36 Definition of home worker: A person who is contracted by the company or by asupplier, sub-supplier or subcontractor, but does not work on their premises. Definition of SA8000 worker representative: A worker chosen to facilitatecommunication with senior management on matters related to SA8000, undertaken by therecognized trade union(s) in unionised facilities and, elsewhere, by a worker elected bynon-management personnel for that purpose. Management representative: A member of senior management personnel appointed bythe company to ensure that the requirements of the standard are met. Worker organisation: A voluntary association of workers organised on a continuingbasis for the purpose of maintaining and improving their terms of employment andworkplace conditions. Collective bargaining agreement: A contract for labour negotiated between an employeror group of employers and one or more worker organisations, which specifies the termsand conditions of employment.4.6. SOCIAL ACCOUNTABILITY REQUIREMENTS4.6.1.CHILD LABOURCriteria: The company shall not engage in or support the use of child labour as defined above. The company shall establish, document, maintain, and effectively communicate topersonnel and other interested parties, policies and written procedures for remediation ofchildren found to be working in situations which fit the definition of child labour above,and shall provide adequate financial and other support to enable such children to attendand remain in school until no longer a child as defined above. The company may employ young workers, but where such young workers are subject tocompulsory education laws, they may work only outside of school hours. Under nocircumstances shall any young worker‘s school, work, and transportation time exceed acombined total of 10 hours per day, and in no case shall young workers work more than 8hours a day. Young workers may not work during night hours
  • 37. 37 The company shall not expose children or young workers to any situations – in or outsideof the workplace – that are hazardous or unsafe to their physical and mental health anddeveloped.4.6.2. FORCED AND COMPULSORY LABOURCriteria: The company shall not engage in or support the use of forced or compulsory labour asdefined in ILO Convention 29, nor shall personnel be required to pay ‗deposits‘ or lodgeidentification papers with the company upon commencing employment. Neither the company nor any entity supplying labour to the company shall withhold anypart of any personnel‘s salary, benefits, property, or documents in order to force suchpersonnel to continue working for the company. Personnel shall have the right to leave the workplace premises after completing thestandard workday, and be free to terminate their employment provided that they givereasonable notice to their employer. Neither the company nor any entity supplying labour to the company shall engage in orsupport trafficking in human beings.Intent: All forms of forced or compulsory labour under every condition are intended to beprohibited by these provisions of SA8000. As part of that principle, SA8000 requires thatevery prospective worker be fully informed of the terms and conditions of the offeredemployment before his recruitment, pre-employment process and employment. The intent of the definition of forced or compulsory labour (which are interchangeableterms representing a single concept) is to include all forms of forced labour, including theuse of compulsory prison labour by private business entities, debt bondage or indenturedservitude. The following types of threats are also all prohibited under SA8000:i. Monetary sanctions, physical punishment, withholding of papers, loss of rights orprivileges and restrictions on movements.
  • 38. 38ii. The addition of Human Trafficking is to raise awareness and to ensure thatemployers take active steps to ensure they have no association with any laboursupplier or subcontractors using labour suppliers who may be trafficking workers.This is intended to ensure that workers are free to leave: To terminate their employment with a company upon the one condition that theygive reasonable notice of their intention to leave their jobs; Leave the work site at the end of his/her routine, normally scheduled workday; and Remove him/her from imminent danger.4.6.3. HEALTH AND SAFETYCriteria: The company shall provide a safe and healthy workplace environment and shall takeeffective steps to prevent potential accidents and injury to worker‘s health arising out of,associated with, or occurring in the course of work, by minimising, so far as is reasonablypracticable, the causes of hazards inherent in the workplace environment, and bearing inmind the prevailing knowledge of the industry and of any specific hazards. The company shall appoint a senior management representative to be responsible forensuring a safe and healthy workplace environment for all personnel, and forimplementing the Health and Safety elements of this standard. The company shall provide to personnel on a regular basis effective health and safetyinstructions, including on-site instruction and, where needed, job-specific instructions.Such instructions shall be repeated for new and reassigned personnel and in cases whereaccidents have occurred. The company shall establish systems to detect, avoid, or respond to potential threats to thehealth and safety of personnel. The company shall maintain written records of allaccidents that occur in the workplace and in company-controlled residences and property. The company shall provide at its expense appropriate personal protective equipment topersonnel. In the event of a work related injury the company shall provide first aid andassist the worker in obtaining follow-up medical treatment. The company shall undertake to assess all the risks to new and expectant mothers arisingout of their work activity and to ensure that all reasonable steps are taken to remove orreduce any risks to their health and safety.
  • 39. 39 The company shall provide, for use by all personnel, access to clean toilet facilities,access to potable water, and, where applicable, sanitary facilities for food storage. The company shall ensure that any dormitory facilities provided for personnel are clean,safe, and meet the basic needs of the personnel. All personnel shall have the right to remove themselves from imminent serious dangerwithout seeking permission from the company.Intent: The intent of all of the elements of this requirement is twofold. First, to clarify andamplify the role of the employer as the responsible party in managing worker‘soccupational safety and health. This includes protecting worker‘s occupational health bysome pro-active measures, such as training and instruction. Second, it adds some newmanagement responsibilities to more effectively provide these protections. This requirement also provides some specific elements of the health and safetymanagement system, e.g., naming a health and safety management representative, thatenable management to establish, maintain and demonstrate its compliance with therequirement. Meeting these goals actively and proactively involves the workers, whoshould receive updated information, training and instruction in response to changes in theworkplace, accidents or their jobs. This function is to be regularly addressed, whichrequires regular planning and documentation.4.6.4.FREEDOM OF ASSOCIATION & RIGHT TO COLLECTIVE BARGAININGCriteria: All personnel shall have the right to form, join, and organise trade unions of their choiceand to bargain collectively on their behalf with the company. The company shall respectthis right, and shall effectively inform personnel that they are free to join an organisationof their choosing and that their doing so will not result in any negative consequences tothem, or retaliation, from the company. The company shall not in any way interfere withthe establishment, functioning, or administration of such workers‘ organisations orcollective bargaining.
  • 40. 40 In situations where the right to freedom of association and collective bargaining arerestricted under law, the company shall allow workers to freely elect their ownrepresentatives. The company shall ensure that representatives of workers and any personnel engaged inorganising workers are not subjected to discrimination, harassment, intimidation, orretaliation for reason of their being members of a union or participating in trade unionactivities and that such representatives have access to their members in the workplace.Intent: The intent of SA8000 is to promote ongoing, constructive social dialogue betweenworkers collectively and management. Employers must demonstrate that they have actively developed and implemented therequired and necessary actions aimed at ensuring that their worksites provide a truly freeand protected environment for the choice of unionization to be free, genuine, and fairlyconsidered. The elimination of the employer requirement, which appeared in previous editions ofSA8000, to ―facilitate parallel means of worker associations in those states where it isnot possible to establish free and independent trade unions, has been replaced by therequirement that in those states a company shall allow workers to freely electrepresentatives. This is intended to mandate that employer‘s honour and provide a safe workplace forworkers‘ full exercise of their rights to ―worker representatives with the same gravityand restraint as employers in states that do permit free and independent trade unions, andfor workers to directly elect their representatives at the company level. Worker‘s choiceof their representatives shall also mean that their representatives be chosen from amongsttheir number of workers, not from supervisory or managerial ranks. In every case,employers should not interfere in workers‘ exercise of these rights. That gravity and restraint is further defined by the provision prohibiting employer‘sinterference, on its own or through third parties, in affecting or competing with the fullexercise of workers‘ rights. This prohibition would include supervisory and managerialpersonnel from being considered or acting as worker representatives. The essence again isto make clear the exact and limited role that employers play in permitting workers toexercise their rights.
  • 41. 41 While none of the provisions in this standard require the establishment of a trade union,SA8000‘s implementation of worker‘s rights clearly and strongly seeks to:a) Protect workers‗ right to all aspects of freedom of association, including their rights toorganize and represent themselves in collective negotiations with management;b) Ensure that management does not intervene in any way in the nomination, election,operation, administration or financing of workers‗ representation;c) Protect against adverse activities that discriminate against worker representatives andmembers of worker organizations, particularly trade unions. These might includediscrimination in the training or promotion of worker representatives or unionmembers or their assignment to less preferred work roles or work sites.d) Ensure that management does not unreasonably refuse to bargain collectively withworker‘s organizations.4.6.5. DISCRIMINATIONCriteria: The company shall not engage in or support discrimination in hiring, remuneration, accessto training, promotion, termination, or retirement based on race, national or social origin,caste, birth, religion, disability, gender, sexual orientation, family responsibilities, maritalstatus, union membership, political opinions, age, or any other condition that could giverise to discrimination. The company shall not interfere with the exercise of personnel‘s rights to observe tenetsor practices, or to meet needs relating to race, national or social origin, religion, disability,gender, sexual orientation, family responsibilities, union membership, political opinions,or any other condition that could give rise to discrimination. The company shall not allow any behaviour that is threatening, abusive, exploitative, orsexually coercive, including gestures, language, and physical contact, in the workplaceand, where applicable, in residences and other facilities provided by the company for useby personnel. The company shall not subject personnel to pregnancy or virginity tests under anycircumstances.
  • 42. 42Intent: SA8000 seeks to ensure equal and respectful treatment for all workers in all matters.They shall be hired only on the basis of their job-related competence, attributes or skills.They shall not be penalized or treated in any different manner due to bias. Employeesshall be employed, trained, promoted and compensated solely on the basis of their jobperformance. They must be free from all types of indecent verbal, physical and sexualharassment and other discriminatory practices. The definition now explicitly prohibits discrimination on the bases of social origin, birth,family responsibilities, marital status and any other condition. Some of these additions are meant to add further non-discrimination protections forfemale job applicants and workers. ―Family responsibilities, which is usually applied tomean a woman‗s children and ―marital status, which is usually applied to wives, are fartoo often used to eliminate a female job applicant from consideration or as the basis forpenalizing a woman worker if, for example, she needs to return home for a sick child.Since the status of having children or being married is so commonly used solely againstwomen, these newly included discrimination barriers are intended to ensure an even-handed approach towards treating female and male workers without bias. Of course, menshould also not suffer discrimination on the grounds of family responsibilities which theydischarge, for example as a parent of caregiver. It is also the intent of this Discrimination Standard to require employer‘s compliance withSA8000‘s inclusions of national law and ILO Conventions, even when applied in nationsand situations where discrimination may be honoured locally as an unquestioned tradition.In some cases, even national law may reflect these biases, such as statutes that permit mento earn more money than women workers when performing the same or equal tasks. No matter the source of discrimination nor how culturally entrenched it may be, onecannot be SA8000 certified without strictly applying its discrimination provisions.4.6.6. DISCIPLINARY PRACTICESCriterion: The company shall treat all personnel with dignity and respect. The company shall notengage in or tolerate the use of corporal punishment, mental or physical coercion, orverbal abuse of personnel. No harsh or inhumane treatment is allowed.
  • 43. 43Intent: It is the intent of the standard that job applicants and current workers should be madeaware of the disciplinary policies and procedures in sufficient detail to inform them aboutthe behaviours that are subject to discipline or poor performance evaluations. Employersmust have written and defined disciplinary rules, including an appeal process for workersnot agreeing with employer‘s disciplinary charges or negative performance reviews. It is also intended that all employer actions—from giving employee performance reviewsto imposing disciplinary measures--should demonstrate respect for worker‘s mental,emotional and physical well-being. These actions should be applied consistently and notarbitrarily to every employee, without any discrimination. It clearly prohibits companies from using employment agencies or suppliers that engagein disciplinary practices that are unacceptable to SA8000. The employer‘s responsibilityto completely honour this prohibition does not stop at the company‘s workplace door.4.6.7. WORKING HOURSCriteria: The company shall comply with applicable laws and industry standards on working hoursand public holidays. The normal work week, not including overtime, shall be defined bylaw but shall not exceed 48 hours. Personnel shall be provided with at least one day off following every six consecutivedays of working. Exceptions to this rule apply only where both of the followingconditions exist:a) National law allows work time exceeding this limit; andb) A freely negotiated collective bargaining agreement is in force that allows work timeaveraging, including adequate rest periods. All overtime work shall be voluntary, shall not exceed 12 hours per week, nor berequested on a regular basis. In cases where overtime work is needed in order to meet short-term business demand andthe company is party to a collective bargaining agreement freely negotiated with workerorganisations (as defined above) representing a significant portion of its workforce, thecompany may require such overtime work in accordance with such agreements. Any suchagreement must comply with the requirements above.
  • 44. 44Intent: SA8000 aims to limit the widespread abuse of working hours, particularly overtime. Itsrule that overtime hours must, in the vast majority of cases, be truly and demonstrablyvoluntary is to be strictly interpreted. The one exception to this rule is in cases where acollective bargaining agreement allows for required overtime under certain, clearlydefined conditions. Even then however, the company should:a) Make allowances for the personal and domestic circumstances of individual workers,as much as feasible; andb) Not allow overtime hours to exceed 12 hours per week. Accordingly the commonlyreferenced ―60 hours rule‖ should be the exception, not the rule and may, when thestate‘s legal standard workweek is less than 48 hours, be less than 60 hours. Thereason for limiting working hours is to promote better work-life balance and reduceworker‘s stress-related occupational conditions and accident rates. A similar provision adds that employers must comply with national laws on publicholidays. It is intended that workers normally receive all public holidays off (or someequivalent in compensatory time or wages) as are set by relevant legal authorities.4.6.8. REMUNERATIONCriteria: The company shall respect the right of personnel to a living wage and ensure that wagespaid for a normal work week shall always meet at least legal or industry minimumstandards and shall be sufficient to meet the basic needs of personnel and to provide somediscretionary income. The company shall ensure that deductions from wages are not made for disciplinarypurposes. Exceptions to this rule apply only when both of the following conditions exist:a) Deductions from wages for disciplinary purposes are permitted by national law; andb) A freely negotiated collective bargaining agreement is in force. The company shall ensure that personnel‘s wages and benefits composition are detailedclearly and regularly in writing for them for each pays period. The company shall alsoensure that wages and benefits are rendered in full compliance with all applicable laws
  • 45. 45and that remuneration is rendered either in cash or check form, in a manner convenient toworkers. All overtime shall be reimbursed at a premium rate as defined by national law. Incountries where a premium rate for overtime is not regulated by law or a collectivebargaining agreement, personnel shall be compensated for overtime at a premium rate orequal to prevailing industry standards, whichever is more favourable to worker‘s interests. The company shall not use labour-only contracting arrangements, consecutive short-termcontracts, and/or false apprenticeship schemes to avoid fulfilling its obligations topersonnel under applicable laws pertaining to labour and social security legislation andregulations.Intent: Although the payment of a living wage is fully intended, the standard recognizes that notall SA8000 certification applicants can revise their wage structures immediately.Consequently, a step-by-step approach is permitted, provided: minimum wage is paid; ananalysis of worker‘s wage needs has been completed; and a target and strategy are inplace to advance wages and show progress over time. The premium wage overtime work provision has been significantly changed in the 2008version of SA8000. It now states that the premium rate is defined by national law orwhen unregulated by law or a collective bargaining agreement, it can be equal to thepremium rate of the prevailing industry, whichever is more favourable to workers, i.e., thehighest. It is intended that workers shall be paid at the most advantageous premium rate.This new language is also intended to provide the basis for establishing and paying apremium rate when neither national law nor a collective bargaining agreement states sucha rate. As to the prohibition against certain contract worker and apprenticeship schemes, thestandard is intended to clarify the prohibition against the many ways worker‘s wages orbenefits are reduced through these mechanisms and apply that prohibition to everycircumstance, including homework. Mainly, labour-only contracts or apprenticeshipschemes cannot be used to avoid paying regular wages and benefits. They also cannot beused to fulfil ongoing, routine tasks integral to the work of a company for any period oftime. It is intended that those who continually fulfil those tasks must have theirrelationship with the company formalized as employees, with all wages and benefits due
  • 46. 46employees. This language is also intended to ensure that employer‘s short-term contractsor home worker and apprenticeship schemes are not used for avoiding worker‘s paymentsand benefits or for denying worker‘s rights to freedom of association and collectivelybargain.4.6.9. MANAGEMENT SYSTEMSCriteria: Policy Top management shall define in writing, in worker‘s own language, the company‘s policyfor social accountability and labour conditions, and display this policy and the SA8000standard in a prominent, easily viewable place on the company‘s premises, to informpersonnel that it has voluntarily chosen to comply with the requirements of the SA8000standard. Such policy shall clearly include the following commitments:a) To conform to all requirements of this standard;b) To comply with national and other applicable laws and other requirements to whichthe company subscribes, and to respect the international instruments and theirinterpretation; To review its policy regularly in order to continually improve, taking into considerationchanges in legislation, in its own code-of-conduct requirements, and any other companyrequirements; To see that its policy is effectively documented, implemented, maintained,communicated, and made accessible in a comprehensible form to all personnel, includingdirectors, executives, management, supervisors, and staff, whether directly employed by,contracted with, or otherwise representing the company; To make its policy publicly available in an effective form and manner to interestedparties, upon request. MANAGEMENT REPRESENTATIVEThe company shall appoint a senior management representative who, irrespective of otherresponsibilities, shall ensure that the requirements of this standard are met. SA8000 WORKER REPRESENTATIVEThe company shall recognize that workplace dialogue is a key component of socialaccountability and ensure that all workers have the right to representation to facilitate
  • 47. 47communication with senior management in matters relating to SA8000. In unionisedfacilities, such representation shall be undertaken by recognized trade union(s). Elsewhere,workers may elect a SA8000 worker representative from among themselves for this purpose.In no circumstances, shall the SA8000 worker representative be seen as a substitute for tradeunion representation.4.6.10. MANAGEMENT REVIEWTop management shall periodically review the adequacy, suitability, and continuingeffectiveness of the company‘s policy, procedures, and performance results vis-à-vis therequirements of this standard and other requirements to which the company subscribes.Where appropriate, system amendments and improvements shall be implemented, the workerrepresentative shall participate in this review.4.6.11. PLANNING AND IMPLEMENTATIONThe company shall ensure that the requirements of this standard are understood andimplemented at all levels of the organisation. Methods shall include, but are not limited to:a) Clear definition of all parties‘ roles, responsibilities, and authority;b) Training of new, reassigned, and/or temporary personnel upon hiring;c) Periodic instruction, training, and awareness programs for existing personnel;d) Continuous monitoring of activities and results to demonstrate the effectiveness ofsystems implemented to meet the company‘s policy and the requirements of thisstandard.The company is required to consult the SA8000 Guidance Document for interpretativeguidance with respect to this standard.4.6.12. CONTROL OF SUPPLIERS/SUBCONTRACTORS AND SUB-SUPPLIERS The company shall maintain appropriate records of suppliers/subcontractors‘ (and, whereappropriate, sub-suppliers‘) commitments to social accountability, including, but notlimited to, contractual agreements and/or the written commitment of those organisationsto:a) Conform to all requirements of this standard and to require the same of sub-suppliers;b) Participate in monitoring activities as requested by the company;
  • 48. 48c) Identify the root cause and promptly implement corrective and preventive action toresolve any identified non-conformance to the requirements of this standard;d) Promptly and completely inform the company of any and all relevant businessrelationship(s) with other suppliers/subcontractors and sub-suppliers. The company shall establish, maintain, and document in writing appropriate proceduresto evaluate and select suppliers/subcontractors (and, where appropriate, sub-suppliers)taking into account their performance and commitment to meet the requirements of thisstandard. The company shall make a reasonable effort to ensure that the requirements of thisstandard are being met by suppliers and subcontractors within their sphere of control andinfluence. In addition to the requirements of above, where the company receives, handles, orpromotes goods and/or services from suppliers/subcontractors or sub-suppliers who areclassified as home workers, the company shall take special steps to ensure that suchhome workers are afforded a level of protection similar to that afforded to directlyemployed personnel under the requirements of this standard. Such special steps shallinclude, but not be limited to:a) Establishing legally binding, written purchasing contracts requiring conformance tominimum criteria in accordance with the requirements of this standard;b) Ensuring that the requirements of the written purchasing contract are understood andimplemented by home workers and all other parties involved in the purchasingcontract;c) Maintaining, on the company premises, comprehensive records detailing the identitiesof home workers, the quantities of goods produced, services provided, and/or hoursworked by each home worker;d) Frequent announced and unannounced monitoring activities to verify compliance withthe terms of the written purchasing contract.
  • 50. 505. SOCIAL ACCOUNTABILITY ACCREDITATION SERVICES (SAAS)It is an accreditation agency founded to accredit and monitor organizations as certifiers ofcompliance with social standards, including the Social Accountability 8000 standard forethical working conditions. Initially SAAS came into existence as a department within SocialAccountability International (SAI) in 1997. Later in 2007, was formally established as its ownnot-for-profit organization (SAAS Social Accountability Accreditation Services). SAAS isnow an independent decision-making agency, linked to SAI only through contractualarrangements.5.1. RESPONSIBILITIES & ACTIVITIESSAAS manages and directs accreditation activities for applicable social standards andverification codes, such as SA8000 and InterAction PVO Standards, including Granting, Maintaining, Extending, Reducing, Suspending and withdrawing of accreditation.Its primary activities are: To accredit and monitor organizations seeking to act as certifiers of compliance withsocial standards, including the Social Accountability 8000 standard for ethicalworking conditions, and other such verification standards; To offer accreditation services to certification bodies (CBs); To determine the qualifications of such organizations to perform full, reliable, andimpartial audits of employers against specified social standards; To provide confidence to all stakeholders in SAAS accreditation decisions and in thecertification decisions of its accredited CBs; To continually improve the SAAS accreditation function activities and systems, incompliance with ISO/IEC Guide 17011 and SAAS Procedure 201, ―Accreditation ofCertification Bodies of Social Accountability Systems‖;
  • 51. 51 To be impartial and fair to all applicant and accredited certification bodies (ABOUTSAAS).SAAS staff is responsible for day-to-day operations, the objectives of which are: To gain international recognition of the accreditation program and its value to society; To expeditiously resolve any complaints and address their root causes; To improve, each year, the reliability and quality of accredited certifications; To deliver all our services in a professional and timely manner that furthers themission of social standards.5.2. OVERSIGHT PROCESS OF SAASSAAS is overseen by Board of Directors, legally responsible for the fiscal and programmaticoversight of the organization. SAAS also confers with an Accreditation Advisory Committeeand Accreditation Review Panel in setting policy and making accreditation determinations.SAAS‘s accreditation activities are monitored by the ISEAL Alliance through a series of peerreviews to ensure compliance with ISO Guide 17011.5.2.1.BOARD OF DIRECTORSThe SAAS Board of Directors consists of at least three persons, with responsibilities andmembership as defined in the by-laws of the Corporation. It evaluates the performance ofSAAS and its management, which includes a review of activities and operations for the lastyear and future work plans, policies and budget. The Board of Directors may contract out toother organizations for management and services for SAAS, as needed. (Board)5.2.2.ACCREDITATION ADVISORY COMMITTEEThe committee was established to advise on and assist in development of strategies andprocedures for sustaining strengthening oversight of SAAS-accredited Certification Bodies. Reviews current procedures on oversight and recommends best practices for SAAS toexercise oversight of accredited certification bodies to ensure consistent, high qualityaudits by qualified auditors. (Accredation Advisory Committee)
  • 52. 52This Advisory Committee consists of technical experts, stakeholders and representatives ofthe bodies that own the Standards to which SAAS provides accreditation services. TheCommittee has access to the necessary expertise for advising SAAS on accreditation matters.The Committee membership includes representatives from civil society and the businesssectors and members participate on a volunteer basis for a three-year period. The committeemembers nominate and elect a chair and members may represent themselves or theorganization for which they work.5.2.3.ACCREDITATION REVIEW PANELSAAS convenes an Accreditation Review Panel (ARP) whose members review audit reportsof the Certification Bodies and any applications for accreditation in order to recommendwhether or not to accredit a CB on behalf of SAAS. The ARP provides advice and counsel toSAAS on such reports and applications, and makes accreditation recommendations on thebasis thereof to the Executive Director. (Accredation Review Panel). The ARP is comprisedof at least three members, nominated by the Executive Director and appointed by the Boardof Directors, consisting of one or more independent technical experts and two representativesof the bodies that own the Standards to which SAAS accredits (one from the business sectorand one from civil society).5.3. ACCREDATION ACTIVITIES & PROCESSSAAS verifies the CBs competence through the series of various audits which review themanagement, processes, and training of the certification process of the CB. This enables CBto evaluate the implementation of SA8000, or other accredited social systems and which, inturn, ensures compliance with all elements of the system. SAAS publics all the detailedinformation related with assessment and accreditation processes (mentioned above). Toassure the accordance of its operations with ISO Guide 17011, it participates in a peerevaluation system, created by ISEAL Alliance.
  • 53. 53Figure 3: Oversight Process of SAAS Accreditation SystemISEAL Peer ReviewSocial AccountabilityAccreditation ServicesCertification Bodies(CBs)Certification ClientsRequest Application Prepare DocumentsSubmit Application, Fees & DocumentsSubmit Application, Fees & DocumentsMeetsCriteria?Corrective ActionDesk Audit/ Document ReviewNOYESYES
  • 54. 54MeetsCriteria?Corrective ActionWitness Audit (Monitor CB auditing a Facility)MeetsCriteria?Corrective ActionDeliberation on AccreditationIssuance of CertificateMaintenance of AccreditationNONOYESYESYESYESFigure 4: Basic Overview of Accreditation Application Process
  • 55. 555.3.1.ACCREDITATION COSTTo accredit and monitor CBs, SAAS charges following fees: APPLICATION PURCHASE FEE: SAAS charges $100 as purchase fee of theapplication. APPLICATION FEE: The application fee, which is payable upon the submission of theapplication for accreditation, is dependent upon the size of organization; and fee must bereceived with the application in order for the application to be considered.Table 8: Application Fee for AccreditationSize FEE (USD)50 or fewer employees 2,50051-250 employees 7,500251 or more employees 15,000 AUDITOR FEE: The audit fees, for accreditation (including reaccreditation) andsurveillance, are $1400 per auditor per day plus $650 per day for travel.o CBs are directly responsible for the cost of travel including airfare, meals, andhotels, and the cost of interpretation if needed. ROYALTY FEE: There is an SA8000 royalty fee of $5,000 or 3% of gross auditing fees,annually (excluding reimbursement of auditor expenses). DOCUMENT FEE: SAAS charges extra charge for the listed documents along withapplication package.Table 9: Document FeeDocument Fee (USD)SA8000: 2008 Standard 20Guidance Document for SA8000 100
  • 56. 56 Certification Body auditors and staff are required to attend SAAS-accredited or approvedauditor, advanced auditor, and professional development training courses. The averagecost of attending a course is approximately $1,200 to $2,000 per person. CB managersand field auditors must also attend SA8000 calibration meetings, the purpose of which isto conform and calibrate the interpretations of requirements used in auditing by SA8000auditors. Generally there is no fee for attending these meetings, although travel expensesmay be incurred by the attendee. REACCREDITATION FEE: payment is required prior to the reissuance ofaccreditation certificate every four years by organization with.Table 10: Application Fee for reaccreditationSize FEE (USD)50 or fewer employees 1,00051-250 employees 3,300251 or more employees 66705.3.2.AUDIT ITEMS & AUDIT DAYSThe number of audit days required varies by several factors: The number of documents received in the document review, The size of the organization being audited (in an office audit), where the CB is in theaudit cycle (whether it is an accreditation or surveillance audit), The audit plan (for a witness audit), and The number of travel days required to get to the audit.Table 11: Audit Items & Average Required Days (L. Bernestien, 2010)AUDIT ITEMS AVERAGE NO.OF AUDITOR DAYSDocument Audits 1-2 daysOffice Audit 1-2 auditors for 2-3 days
  • 57. 57Witness Audit 2 auditors for 2-3 daysReport Writing 1-2 days5.4. CERTIFICATION BODIESOnly those organisations, which are accredited through SAAS, can provide the certification tothe applied organisation/firm. The current list and contact information of SAAS-accredited certification bodies (CBs) is provided below.Table 12: List of Current CBs- SAAS Accredited (Accredited Certification Bodies)CB SCOPE OFACCREDITATIONINITIAL DATE OFACCREDITATIONEXPIRY DATE OFACCREDITATIONABS QualityEvaluations, IncGlobal January 1, 2007 December 30, 2012ALGI Global November 1, 2004 Reaccreditation inProgressAPCER Global February 1, 2007 January 31, 2013BSI Global March 1, 2005 Reaccreditation inProgressBureau VeritasCertificationGlobal March 1, 1999 January 31, 2015CISE (Centro perlInnovazione e loSviluppoEconomico)Global March 1, 2001 March 31, 2014DNV (Det NorskeVeritas AS)Global September 30, 1998 Reaccreditation inProgressEUROCERT S.A. Global November 17, 2009 November 16, 2012
  • 58. 58Global CertificationLimted T/AGlobalGROUPGlobal April 1, 2012 March 31, 2016HKQAA (HongKong QualityAssurance Agency)China December 1, 2007 November 30, 2014Institute of Quality& Control Ltd.(IQC)Regional, Israel &JordanDecember 13, 2010 December 12, 2014Intertek (IntertekTesting Services)Global November 1, 1999 December 31, 2014IQNet Ltd Global May 1, 2007 April 30, 2014LRQA (LloydsRegister QualityAssurance Ltd.)Global June 16, 2008 June 15, 2015SGS-SSC Global June 30, 1998 June 34STR-Registrar, LLC(STR)Global June 30, 1998 Reaccreditation inProgressTUV NORD CERTGmbHGlobal January 1, 2001 December 31, 2013TUV RheinlandGroupGlobal March 31, 2015 March 31, 2015TUV SUD Group(TUV Sud SouthAsia)Global March 31, 2006 March 30, 20065.4.1.CRITERIA TO CONDUCT AUDIT & ISSUE CERTIFICATETo conduct an SA8000:2008 audit and issue the certificate of SA8000:2008, the followingcriteria must be met:a. The CB shall be responsible for disseminating the SA8000:2008 drafters note to allSA8000 auditors.
  • 59. 59b. Each audit team conducting an SA8000:2008 shall consist at least a Lead Auditor,who shall be trained on the elements of SA8000:2008 elements. This training shallconsist of:i. Update training provided by SAI/SAAS for those SA8000 auditors, whohave attended the SA8000 basic training prior to January, 2009 (For thoseauditors, who attended the basic auditor training after January, 2009, thereis no need to attend one day update training because the basic trainingincludes the information about SA8000:2008).ii. Internal training of auditor by CB employing SA8000 auditor to disseminateand calibrate the new processes and internal procedures related withSA8000:2008.c. All SA8000 team auditors on the audit team conducting an audit to SA8000:2008shall be trained on the elements of SA8000:2008. This training shall include atminimum:i. Training of auditor by CB employing SA8000 auditor on elements andinterpretation of SA8000:2008 (the update training is open to all auditors,including team auditors who may substitute the internal training by CB onSA8000:2008 with the update training; however, as noted in b ii. it isrequired for the qualification of lead auditor).ii. Internal training of auditor by CB employing SA8000 auditor to disseminateand calibrate new processes and internal procedures related toSA8000:2008.d. All managers of the SA8000 program and those staff involved in technical review ofSA8000 reports shall be required to take the update training.5.4.2. RECORDS MAINTAINED BY CBsThe CBs shall maintain, as a minimum, the following records:i. Copies of scheduled audits showing time and assigned auditor.ii. Auditors qualification records (full-time and sub-contract).
  • 60. 60iii. The quotation file to the organization, including the audit days and how they werecalculated, and audit day fees.iv. Notes/minutes from stakeholder consultation and other pre-audit research.v. Explanation of basic needs wage Pre-assessment reports, if conducted.vii. The report of stage 1 readiness review, including the evidence that all of therequirements of SA8000 and other applicable social standards are addressed bycertification applicant‘s processes.viii. The audit plan (agenda) demonstrating auditor itinerary details, time frames, subjects(processes) covered, and personnel involved.ix. The final audit report, including the opening and closing attendance records, positivereporting notes and checklists completed by each auditor and the audit teamrecommendation regarding certification.x. Copies of all nonconformities issued, surveillance audit reports, follow up reports, andother documentations leading towards the verification of effectiveness of thecorrection of nonconformities.xi. Audit logs/notes as maintained by each audit team member.xii. A copy of certification decision process.xiii. A copy of certificate issued.xiv. The audit team member‘s initial approval and continuous performance evaluation.xv. Clients, interested parties, organisation and worker‘s complain including the actionstaken to resolve.xvi. A register of SA8000 and all other applicable social standards certified organization.All the records mentioned above, stored in hard copy or electronically, must be readilyaccessible during an office assessment by SAAS. This must be considered when establishinga decentralized office. The records mention must be retained for the life of certificate plus atleast 3 years.
  • 61. 61Records shall be accessible at the designated office and remain legible, readily identifiableand retrievable. These documents must be made available to SAAS to allow adequate reviewand oversight and to provide appropriate evidence of compliance by the CB and its personnel. One of the CB staff shall be designated to interface with SAAS. This designated staffwill be direct contact for SAAS and will be responsible for the control of all activitiesrelated with social standard certification, except where necessary for scheduling andlogistics. The office where designated staff is based shall be visited annually.While documents should be in English, some smaller, regional organisation may maintain itsdocument in the regional language due to cost containment. In this case, appropriatetranslation must be made available in order to ensure that representative of SAAS canevaluate those effectively. The CB shall maintain an effective procedure for identification,storage, protection, retrieval, retention time and disposition of records.5.5. CERTFICATION PROCESSFor the Certification, an organisation must follow the below mentioned process.Figure 5: Steps of CertificationIMPLEMENTATION OF STANDARDSThrough SA8000 CertificationThrough Corporate Involvement Program(CIP)APPLICATIONA facility wishing to seek certification to SA8000 must apply to a SAAS-accreditedauditing firm, or certification body.
  • 62. 625.5.1. APPLICATIONCB shall require the applicant to provide the information to enable it to establish thefollowing: Desired scope of certification. Name, address, sites, significant aspects, legal obligations. Information relevant for field of certification, resources, and relationship in acorporation. Information concerning outsourced processes Applicants to provide the information concerning any management systemconsultancy received. APPLICATION REVIEWCB shall review the application to ensure that: Information sufficient for an audit. Requirements provided to the applicant. Any known differences are resolved. CB has competence and ability to provide the certificate. Scope, locations, audit time, threats to safety or impartiality has been taken intoaccount. Records of justification to accept client are maintained.After the review of application, the CB shall determine the competence needed for the auditteam and for the certification team, followed by the appointment of the audit team having thetotality of needed competences. After that the CB shall ensure the appointments of personsfor making the certification decisions that have the competences needed.5.5.2. SA8000 CERTIFICATION PROGRAMThe certification process must follow the ‗Functional Approach‘ for the whole lifecycle ofcertification, as mentioned in ISO/ISE 17021.
  • 63. 63Figure 6: Life Cycle of Certification (L. Bernstein, 2007)The entire management system for SA8000 shall be accessed at minimum of once every threeyears. The audit cycle shall be based upon the dates of initial certification decision. The timeinterval between initial certification and recertification or between two recertification auditsshall not exceed three years from issue, except that a grace period of 3 months may beallowed with proper documented justification. INITIAL CERTIFICATION AUDITFigure 7: Stages of Initial Certification Audit• Startingpriod (1stYear)INITIALCERTIFICATIONAUDIT• 1st & 2nd YearSURVIELLANCEAUDIT • 3rd/Last Year(Prior toExpiration)RECERTIFICATIONAUDITSTAGE 1ReadinessReviewSTAGE 2Site AuditINITIALCERTIFICATIONAUDIT
  • 64. 64Stage 1 Audit shall be performed to: Audit management system documentation. Evaluate the sites and personnel to determine the preparedness for the stage 2 audit. Review client‘s understanding and identification of key performances or significantaspects regarding the scope and operation of the management system. Collect necessary information regarding the scope and related statutory and regulatoryrequirements of the client‘s operations. Review allocation of resources and agree with the client upon the details for the Stage2 audit. Provide a focus for planning the Stage 2 audit by gaining the understanding of theclient‘s management system, site operations and significant aspects. Evaluate if internal audits and management reviews are being performed and that thelevel of implementation substantiates the client is ready for the Stage 2 audit.Stage 1 audit findings shall be documented and communicated to client, includingidentification of any areas of concern. The time needed to resolve any area of concern, identified in stage 1 audit, must beconsidered in determining the arrangement for Stage 2 audit.Stage 2 audit mainly serves the purpose of evaluation of the implementation, including theeffectiveness of the client‘s management system. The Stage 2 audit shall take place at thesites of the client.The Stage 2 audit shall include, at least: Evidence of conformity to all requirements. Performance against key objectives and targets. Performance as regards legal compliance. Operational control of processes Internal auditing and management review. Management responsibility for client‘s policies. Links between requirements, policy, performance objectives and targets consistentwith the expectations of the standard, legal requirements, responsibilities, andcompetence of personnel, operations, performance data and internal audit conclusions.
  • 65. 65The audit team shall analyze all information and audit evidence form Stage 1 and Stage 2audits and agree upon conclusions. The information provided by audit team for granting theinitial certification must have: Audit reports (Stage 1 & Stage 2) Comments on non-conformance, corrections and corrective actions Conformation of information used in application review No of employees for determining the audit duration. Use of consultancy Audit team recommendations for or against certification. SURVEILLANCE AUDITSCB shall develop its surveillance activities so representative areas and functions aremonitored on a regular basis and take into account changes. Surveillance shall include on-siteaudits and may include Enquiries to the clients on aspect of certification. Reviewing client‘s website and promotions. Request to the client for documents and records. Other means of monitoring performance.Surveillance audits are on-site audits, but not necessarily full system audits and shall beplanned with other surveillance activities so that CB can maintain confidence thatmanagement system continues to fulfil the requirements between recertification audits.Figure 8: Minimum Required Elements of Surveillance AuditInternal audits &managementreviewActions on NCRsfrom previousauditComplaintsEffectivenessacheiving cleintsobjectiveProgress atcontinualimprovementContinuingoperational controlChangesUse of marks &reference tocertification
  • 66. 66Surveillance audits shall be conducted at least once a year. Date of first surveillance audit following certification shall not be more than 12months from the last day of Stage 2 audit (date of closing meeting). CERTIFICATE MAINTENANCECB shall maintain certification based on demonstration that the client continue to satisfyrequirements. CB may maintain certification based on a positive conclusion by the audit teamleader without further independent review, provided: For any issue that may lead to suspension or withdrawal, the audit team leaderinitiates review by competent personnel different from those carrying out audits. Competence CB personnel monitoring the effectiveness of the CB‘s surveillanceprogram. RECERTIFICATIONA recertification audit shall be planned and conducted to evaluate continual fulfilment of allrequirements, to confirm continued conformity and effectiveness of the management systemas a whole and continued relevance for the scope. The recertification audit shall considerperformance over the period of certification and include the review of previous surveillanceaudit reports.5.5.3. AUDIT PROCESSCertification shall apply to all parts of a continuous process or premises. The entire processmust be complaint in order to get the certification. For example, in a situation with several assembly lines, all must be audited forcertification. In a continuous process of fabrication, finishing and packing, the entire process mustbe audited.
  • 67. 67Figure 9: Industry Supply ChainThe demography of RMG sector reveals that the workforce is young, semiskilled andunorganized. To adopt and fully implement the social compliance and labour standards atthis step of chain, it is necessary to increase the awareness at initial steps/sections. So for thispurpose, it becomes unavoidable to audit those sectors also.For multiple site audit schemes (multi-site sampling), sites shall be audited in accordancewith the predefined sampling procedures, in order to cover all the sites efficiently in requiredtime period.Audit planning and execution shall take into account all workers on-site as well as off-site,including all type of workforce. It shall cover all the sift running at floor. The audit plan shallbe developed by discussions and information gathered from local and regional experts &stakeholders. The following points shall be taken into consideration of discussion:a. Wage levelsRAW MATERIALTEXTILE PLANTSAPPARELMANUFACTURINGUNITSEXPORT CHAINSRETAIL STORESCUSTOMERS
  • 68. 68b. NGO & Trade Union Consultationsc. Language Needsd. History of Organization5.5.4. NON CONFORMITY & CORRECTIVE ACTION REQUEST (CAR)Figure 10: Classification of Non-ConformitiesAll nonconformities shall be recorded. Nonconformities may not be closed during the audit inwhich they were issued. The CB shall require the organisation to submit the root causeanalysis and evidence of corrective actions. Audit nonconformity (Corrective Action request-CAR) finding shall have three distinct parts:a. Statement of Nonconformity.b. The requirement or specific reference to the requirement in SA8000.c. The objective evidence observed that supports the statement of nonconformity.MAJORThe absence (or total break down) ofasystem to meet SA8000 requirement. Anumber of minor nonconformitiesagainst one requirement can represent atotal breakdown of system.A nonconformity that judgement andexperience indicate is likely either to failin meeting the goals and requirements ofsocial management system or to reduceits capability.A nonconformity that posses iminentthreat to healt & safety of workers.MINORA failure in some part of theorganisations socialmanagement system relative tocertification , which is notsystematic in nature.A single observed lapse infollowing one item of acompanys social managementsystem.
  • 69. 695.5.5.IMPLEMENTATION & MAINTENANCE PLANThe comprehensive Implementation Program is designed for companies in the early stages ofthe SA 8000 process.Figure 11: Elements of Implementation Plani. Gap Analysis: compares the organization‘s current social accountability system,if any, to SA 8000 requirements, identifies nonconformities and recommendsactions to achieve conformity.ii. SA 8000 Overview: describing social accountability system and certificationrequirements.iii. Social Accountability Policy Development: creating a document that describessocial accountability policy, procedures, requirements, goals and structures.iv. Procedures Development: covering methods, strategies and principles used toperform social accountability system activities.v. Registrar Liaison: contacting an accredited third-party firm that audits the socialaccountability system, its documentation and implementation for SA 8000certification.Gap AnalysisSA 8000OverviewSocialAccountabilityPolicyDevelopmentProceduresDevelopmentRegistrarLiaisonSeniorManagementRepresentativeSelectionProceduresImplementationInternal AuditAssistanceCorrectiveActionAssistance,PreassessmentConsultingDuring theCertificationAudit
  • 70. 70vi. Senior Management Representative Selection: choosing the person with day-to-day responsibility for social accountability system development andimplementation, as well as liaison between management and the registrar.vii. Procedures Implementation: ensuring social accountability system conformityto SA 8000.viii. Internal Audit Assistance: monitor social accountability system implementationfor conformity to SA 8000.ix. Corrective Action Assistance: eliminate social accountability systemnonconformities found during internal audits.x. Preassessment of social accountability system implementation to prepare for thecertification audit.xi. Consulting during the Certification Audit of the social accountability system,facilities, records and other documentation.Once SA 8000 certification has been achieved, the social accountability system must bemaintained.Figure 12: Elements of Maintenance PlanINTERNALAUDITS• Internal audits are a crucial component in socialaccountability system checks and balances, fordiscovering a major nonconformity during an internalaudit can prevent certification from being revoked duringthe subsequent surveillance audit.CORRECTIVEACTIONS• Performed after surveillance audits to close outnonconformities.
  • 72. 726. CERTIFICATION STATISTICSTable 13: Current Scenario of World-wide Certification for all sectorsFacilities Currently Certified 2785Countries Represented 62Industries Represented 65Workers Employed 16,48,086Table 14: Worldwide country wise Certifications for Accessories ManufacturingIndustriesCOUNTRY CERTIFICATIONSBangladesh 1China 22Hong Kong 6India 9Italy 1Taiwan 2Vietnam 3
  • 73. 73Graph 10: %Share of each countryTable 15: Country wise worldwide certification for Apparel ManufacturingCOUNTRY CERTIFICATIONSBangladesh 2Belgium 1China 98Greece 1Hong Kong 4India 225Indonesia 2Italy 15Lithuania 1Pakistan 61Bangladesh2%China50%Hong Kong14%India20%Italy2%Taiwan5%Veitnam7%
  • 74. 74Peru 1Romania 1Sri Lanka 8Switzerland 2Tanzania 1Thailand 5Tunisia 3Turkey 2United Kingdom 3Graph 11: %Share of each country in Apparel CertificationBangladesh0.44%Belgium0.22%China21.59%Greece0.22%Hong Kong0.88%India49.56%Indonesia0.44%Italy3.30%Lithuania0.22%Pakistan13.44%Peru0.22%Romania0.22%Sri Lanka1.76%Switzerland0.44%Tanzania0.22%Thailand1.10%Tunisia0.66%Turkey0.44%United Kingdom0.66%Vietnam3.96%
  • 77. 77Table 17: Year wise certifications Gained by industries of India (all sectors)YEAR CERTIFICATION2011 942010 1532009 1522008 752007 452006 322005 232004 232003 182002 42001 3Graph 12: Scatter diagram (regression analysis) of year wise certifications9415315275453223231843y = 14.35x - 28739R² = 0.749-40-200204060801001201401601802000 2002 2004 2006 2008 2010 2012NOOFCERTIFICATIONYEAR
  • 78. 786.1.1.CERTIFICATIONS FOR APPAREL INDUSTRY IN INDIATable 18: Region wise certification gained by Apparel IndustryREGIONAL AREA NO. OF TOTALCERTFICATIONSTirupur 125Rest Tamil Nadu (except Tirupur) 42Bangalore & Near By Areas 14UP 13Gujarat & Daman 11Maharashtra 8Haryana & Punjab 6Other 6Graph 13: %Share of Region wise certification in Apparel IndustryTirupur55%Rest TamilNadu (exceptTirupur)19%Bangalore &Near By Areas6%UP6% Gujrat & Daman5%Maharashtra3%Harayan & Punjab3%Other3%Other8%
  • 79. 79Table 19: Year wise certifications for Indian Apparel IndustryYEAR No. OF CERTIFICATIONS2001 22003 32004 82005 72006 152007 152008 302009 572010 622011 26Graph 14: Correlation of year an no of certifications2 38 715 15305762y = 6.8823x - 13783R² = 0.7827-20-100102030405060702000 2002 2004 2006 2008 2010 2012 2014No.OfCertificationsYear
  • 80. 80Graph 15: Periodical Analysis of certifications for Indian Apparel IndustryGraph 16: Monthly Analysis of certifications for Indian Apparel Industry1 1 195171024466546010203040506070NOOFCERTIFICATIONDURATION No of Certifications0510152025303515615251917241025311820NOOFCERTIFICATIONMONTH
  • 81. 81Graph 17: Line Diagram Analysis of Month & No. of certifications6.1.2. CERTIFICATIONS FOR APPAREL INDUSTRIES AT BANGALORETable 20: List of certified facilitiesCompany Date ofInitialCertificationAddress of Head Office Scope Certification BodySHAHIEXPORTSPVT. LTD.20-Jan-04 BELLANDUR GATE,SARJAPUR ROAD,BANGALORE – 560 102.KARNATAKA, INDIA.MANUFACTUREAND EXPORT OFREADYMADEGARMENTS.BureauVeritasCertificationBirdyExports PvtLtd16-Apr-04 No. 68, I and II Floor, 2ndStade, Industrial Suburb,Yeshwanthpur, Bangalore560022, Karnatka, IndiaMANUFACTURING, EXPORTINGOF GARMENTSANDMONITORING OFORDERS,BureauVeritasCertification15615251917241025311820y = 0.891x + 12.95R² = 0.215051015202530350 2 4 6 8 10 12 14CERTIFICATIONSMONTHS
  • 82. 82INSPECTIONSERVICE FORREADY MADEGARMENTS.ShahiExportHouse03-Feb-05 43/2, 43/3, 31/1 B, ArekereVillage, Bannerghata, MainRoad, Bangalore - 560 076,Karnataka, IndiaManufacture ofknitted readymadegarmentsBureauVeritasCertificationTop StitchApparelsPvt Ltd10-May-05 NO 9, 1st Cross,Vidyanagar Main Road,Kurubarahalli, Bangalore -560086 Karnataka, IndiaManufacture andexport of wovengarmentsBureauVeritasCertificationGeeyesClothingPvt. Ltd.15-Mar-06 S-1(D), 1st Cross, PeenyaIndustrial Estate, OppositePF office , Bangalore-560058, IndiaManufacture andexport ofreadymadegarmentsDNVMandhanaIndustriesPvt. Ltd25-Nov-06 No.26A , IInd stage, PeenyaIndustrial Area BangloreBangalore-560058, INDIAManufacture &Export of GarmentsTUV SUD,South AsiaFashionMatrixClothing,FashionMatrixOverseas25-Jun-08 No.284, 2nd floor, 2ndcross, 4thPhase, PeenyaIndustries Area, Banglore-560 058 - IndiaManufacturing ofReady madeGarmentsBSI
  • 84. 84PVT. LTD. ELECTRONIC CITYPOST, HOSUR MAINROAD, BANGALORE –560 100.READY TOWEARAPPARELSCertificationGraph 18: Periodical Analysis of Bangalore facilitiesGraph 19: No. of certified units for each organisation2 21 1232101234OCT 2003-SEP 2004OCT 2004-SEP 2005OCT 2005-SEP 2006OCT 2006-SEP 2007OCT 2007-SEP 2008OCT 2008-SEP2009OCT 2009-SEP 2010OCT 2010-SEP 2011CERTIFICATIONDURATIONNO. OF CERTIFICATIONS31 1 1 1 1 1 1 1 1 1 101234CERTIFICATIONORGANISATION
  • 86. 867. METHODOLOGY7.1. OBJECTIVES OF THE STUDY To study Social Compliance as a whole To study & compare the demands of buyers from USA & Europe regarding withcompliance & audit put on Indian Apparel Exporters (Manufacturers). To study issues regarding social compliance at various apparel manufacturing industryat Bangalore. To study the phases of compliance and indentify the issues at each phase. To formulate a set of recommendations for enhancement of certifications in regards ofsocial compliance.7.2. METHODOLGY7.2.1.LITERATURE REVIEW Study of Social Compliance concept for better understanding Reviewing the various study and research related to social compliance issues inApparel Industry Study of various norms and regulation regarding Social Compliance put by Buyers(Europe and US) on Indian Apparel Exporters (Manufacturers)7.2.2. DATA COLLECTION On-site survey of different manufacturing units. Questionnaires for HR teams, Technical teams and operators Interview with different HR teams and labour organisations.7.2.3. DATA ANALYSIS & COMPILATION Comparison of issues by manufactures and demand by buyer regarding Socialcompliance, understanding and analysing the gap
  • 87. 877.2.4. CONCLUSION Development of the potential impacts on business by certification of SA8000 andframework of implementation process.7.3. RESEARCH TOOLS Questionnaire. Interviews (case studies) On-site Surveys7.4. DATA REQUIRED Descriptive data related with social compliance and its phases, code of conduct andissues at different industries. Certifications followed by different industries and assessments provided according tothat. Data related with reference level of social compliance and certifications.Secondary DataInternalMentor & GuideExternalPublishedMaterialsOnline Articles &MaterialsConsultancyServices
  • 88. 887.5. DATA SOURCES HR & Technical teams of various industries. Concerned organisations. Operators.7.6. SAMPLING Sample Sizeo Labour-60o Management-12Published MaterialGeneral Business SourcesStatistical Data(SAI)AEPCBusinessPeriodicalsBooksCOC of buyersGovernment SourcesIndian Labor LawsState Labor law(Karnataka)Trade Laws
  • 89. 89HYPOTHESIS
  • 90. 908. HYPOTHESISH1- Certifications and endorsements of social compliance have become imperative forexporters as they work with buyers, retailers and big brands, who are members of suchinitiatives for ―Responsible Business‖.H2- Awareness-building on requirements of ethical business is required at bottom level.H3- SA 8000 certification is still a challenge because it scrutinizes the entire supply chain.H4- Better transparency & oversight of certifications are required.
  • 91. 91SA8000 & INDIAN LABOUR LAW
  • 92. 929. LABOUR LAWS OF INDIA―To secure to each labourer the whole product of his labour, or as nearly as possible, is aworthy object of any good Government‖ - Abraham Lincoln.―Labour Law is the body of laws, administrative rulings, and precedents which address therelationship between and among employers, employees, and labor organizations, oftendealing with issues of public law‖. Source: Wikipedia9.1. ORIGINS OF LABOUR LAWSLabour laws emerged when the employers tried to restrict the powers of workersorganisations and keep labour costs low. The workers began demanding better conditions andthe right to organise so as to improve their standard of living. Employer‘s costs increased dueto workers demand to win higher wages or better working conditions. This led to a chaoticsituation which required the intervention of Government. In order to put an end to thedisputes between the ever-warring employer and employee, the Government enacted manylabour laws.In India the labour laws are so numerous, complex and ambiguous that they promotelitigation rather than the resolution of problems relating to industrial relations. The labourmovement has contributed a lot for the enactment of laws protecting labour rights in the 19thand 20th centuries. The history of labour legislation in India can be traced back to the historyof British colonialism. The influences of British political economy were naturally dominant insketching some of these early laws. In the beginning it was difficult to get enough regularIndian workers to run British establishments and hence laws for chartering workers becamenecessary. This was obviously labour legislation in order to protect the interests of Britishemployers.India provides for core labour standards of ILO for welfare of workers and to protect theirinterests. India has a number of labour laws addressing various issues such as resolution ofindustrial disputes, working conditions, labour compensation, insurance, child labour, equalremuneration etc. Labour is a subject in the concurrent list of the Indian Constitution and istherefore in the jurisdiction of both central and state governments. Both central and stategovernments have enacted laws on labour issues. Central laws grant powers to officers under
  • 93. 93central government in some cases and to the officers of the state governments in some cases.(Rajkumar S. Adukia)9.2. LABOUR JURISDICTION IN INDIAUnder the Constitution of India, Labour is a subject in the Concurrent List where both theCentral & State Governments are competent to enact legislation subject to certain mattersbeing reserved for the Centre.Table 21: CONSTITUTIONAL STATUSUnion List Concurrent ListEntry No. 55 : Regulation of labour andsafety in mines and oil fieldsEntry No. 22: Trade Unions; industrial andlabour disputes.Entry No. 61: Industrial disputes concerningUnion employeesEntry No.23: Social Security and insurance,employment and unemployment.Entry No.65: Union agencies and institutionsfor "Vocational"Entry No. 24: Welfare of about includingconditions of work, provident funds,employers invalidity and old age pension andmaternity benefit.Matters relating to Social Security are Directive Principles of State Policy and the subjects inthe Concurrent List.The following social security issues are mentioned in the Concurrent List (List III in theSeventh Schedule of the Constitution of India) –Item No. 23: Social Security and insurance, employment and unemployment.Item No. 24: Welfare of Labour including conditions of work, provident funds, employers‘liability, workmen‘s compensation, invalidity and old age pension and maternity benefits.
  • 94. 949.3. FUNDAMENTAL RIGHTSDIRECTIVE PRINCIPLES OF STATE POLICYArticle 41. Right to work, to education and to public assistance in certain casesThe State shall, within the limits of its economic capacity and development, make effectiveprovision for securing the right to work, to education and to public assistance in cases ofunemployment, old age, sickness and disablement, and in other cases of undeserved want.Article 42 Provision for just and humane conditions of work and maternity reliefThe State shall make provision for securing just and humane conditions of work and formaternity relief.Article43. Living wage, etc., for workers.—The State shall endeavour to secure, by suitablelegislation or economic organisation or in any other way, to all workers, agricultural,industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard oflife and full enjoyment of leisure and social and cultural opportunities and, in particular, theState shall endeavour to promote cottage industries on an individual or co-operative basis inrural areas.Article43A. Participation of workers in management of industries.—The State shall takesteps, by suitable legislation or in any other way, to secure the participation of workers in themanagement of undertakings, establishments or other organisations engaged in any industry.9.4. LABOUR LEGISLATIONSThough there exist many labour laws, we have extracted the Laws that are applicable toApparel Manufacturing Industry. They are discussed below:9.4.1. CENTRAL LAWSI) Laws on Industrial Relations The Industrial Disputes Act, 1947 (Central Act from 01-04-47) The Industrial Employment (Standing Orders) Act, 1946 (Central Act w.e.f. 23.04.46) The Trade Unions Act, 1926 (Central Act w.e.f. 01-06-27)
  • 95. 95II) Laws on working conditions The Contract Labour (Regulation and Abolition) Act, 1970 (Central Act w.e.f 07-09-70) The Inter-State Migrant Workmen (Regulation of Employment and Conditions ofService) Act, 1979 (Central Act w.e.f 12-06-79) The Child Labour (Prohibition and Regulation) Act, 1986 (Central Act w.e.f 23-12-86) The Labour Laws (Exemption from furnishing Returns and Maintaining Registers bycertain Establishments) Act, 1988 The Payment of Wages Act, 1936 (Central Act w.e.f 23-04-36) The Minimum Wages Act, 1948 (Central Act w.e.f 15-03-48) The Payment of Bonus Act, 1965 (Central Act w.e.f 25-09-65) The Equal Remuneration Act, 1967 (Central Act w.e.f 12-02-76) The Factories Act, 1948 (Central Act w.e.f 01-04-49) The Bonded Labour System (Abolition) Act, 1976 (Central Act w.e.f 09-02-76) The Workmens Compensation Act, 1923 (Central Act w.e.f 01-07-24) The Maternity Benefit Act, 1961 (Central Act w.e.f 01-11-63) The payment of Gratuity Act, 1979 (Central Act w.e.f 21-08-72) The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (Central Actw.e.f 04-03-52) Employees State Insurance Act, 1948
  • 96. 969.4.2. STATE LAWS (Karnataka) (Labor Legislations): The Karnataka Industrial Establishments (National and Festival Holidays) Act, 1963.(State Act w.e.f.11-07-63) The Karnataka Labour Welfare Fund Act, 1965. (State Act w.e.f. 5-08-65)9.5. SA8000 AND INDIAN LABOUR LAWThe basic difference between SA8000 and Labour Laws in India is that the first one isVoluntary and the later one is the legal requirements to follow in dealing with any Labourrelated case in India. Legal violation can lead to penalty but same is not the case withviolation of Ethical values. So, if there is link between these two, the ethical values will beeasily initiated in an organization.The requirements of SA8000 and Indian Labour law are both based on ILO convention. So, inthis chapter the following cases will be studied.i. Situation where there is a law for supporting SA8000 Requirementsii. Situation where there exist no/ less strict law to fulfil SA8000Requirementsiii. Situation where there is conflict between SA8000 Requirements andIndian Labour Law9.6. ANALYSISAfter analysing the Labour Laws with the requirements of SA8000, it has been found out that,there is no Conflicting difference between SA8000 requirements and Indian Labour Law.Some Difference exists but this is due to the fact that Indian Labour Law is formulated for usein India and SA8000 is an International Standard. So, though there some gap regardingDefinition of some components still exist, the main Principles underlying both are almostsimilar.So, it can be concluded that SA8000 is adaptive to Indian Labour Laws. Indian Labour Lawscan be used effectively to easily implement SA8000 requirements. The fact that Laws andRegulation are to be already followed makes implementation of Voluntary Standard likeSA8000 much easier.
  • 98. 9810.INTERVIEW COMPILATION10.1. FACTORY A10.1.1. GENERAL INFORMATION City: Bangalore State: Karnataka Worker Strength: 850 Interview Date: 12-04-201210.1.2. CERTIFICATION INFORMATION Certification: SA8000 Status: Planning10.1.3. GENERAL VIEW ABOUT SOCIAL COMPLIANCEGrowing concern over ‗sustainable business‘ has enhanced the requirement of better socialcompliance level. Buyers are more eager to know the practices followed at the productionfloor for the better working condition and the performance of its vendor/supplier accordingto requirement of these factors.According to him, 90% of the requirements are according to the statuary requirements(country & state laws, rules and regulations), while 10% of it varies from buyer to buyer. Soit is a good option to have a standard/certification which is internationally accepted.He has mentioned that almost every industry is following the minimum requirements ofcompliance, but the developing status of the society is compelling to go beyond theserequirements. This demanding scenario is enforcing to follow the developed 2ndstagestandards and practices, like SA8000.On the question of enforcement by buyers to get the certification, he stated that there arealways two methods to learn:i. Self motivation & encouragementii. Being forced/pushed by other powerful authority to perform.
  • 99. 99The second method is better for those who are not willing to learn & implement socialcompliance standards and ethical practices just because of economic aspect of business.These certifications pressurize to follow the standards and make the facilities ever ready forsurveillance and surprise audits.10.1.4. MOTIVES FOR IMPLEMENTATIONThe facility is planning to expand the export business. Now a day social compliance is one ofmajor aspect to gain the confidence of buyer to place an order. So they want a certification ofsocial compliance for better image in European market as ethical organisationThey discussed the issue with some of its loyal and confidential buyer, and got the suggestionfor SA8000 and WRAP. The management of the organisation discussed about both and optedto go for SA8000 because of better concern over worker‘s benefit. Now the organisation is inthe planning stage of the certification. The organisation has opened the bid and are preparingfor pre-assessment audit.Opening the bid → Selection of CB → Preparation for Pre-assessment Audit10.1.5. ECONOMICAL IMPACTCost Factor“There is cost involved in certification and maintenance, but this investment may help toavoid the cost of separate audits of different buyers”The organisation has wide range of buyers of different origin and each buyer has its own‗Code of Conduct‘ & Audit process. Each buyer conducts its own audit for the conformationof social compliance. In case of third party audit, the facility has to bear the cost of theseaudits.Having SA8000, widely accepted, will help to tackle the scenario and will help to reduce thefrequency of these separate audits of each buyer, thus will help to reduce the audit cost.According to him, the initial certification may cost 80,000 -1, 20,000 INR depending uponthe pre status of compliance. It also depends on the scope of certification.
  • 100. 100Maintenance is also a significant amount. It is required to measure the performance which canbe assured by either third party audit or development of internal audit and managementreview system.10.1.6. OPPORTUNITIESHaving Social Compliance certification will definitely lead to more orders or at least canmake the company eligible to get more order.He also mentioned that the proper definition of acceptable performance will help to avoidconfliction with stakeholders. According to him, lack of proper definitions of acceptableperformance may arise some conflictions between the organisation and buyer. He stated anexample of confliction on washing allowance, which is ongoing from one year.According to the buyer, there is a requirement of washing allowance for workers of thespecific department and enforcing the facility to pay the allowance, while the facility arguesthat there is no need of specific allowance for those workers, it comes under the classificationof basic allowances of the worker and already calculated in the wages.10.1.7. OBSTACLE WITH SOCIAL COMPLIANCE CERTIFICATIONSometimes external agencies may disturb the whole management system which results intoinconvenience for the management.10.1.8. SOCIAL IMPACTSThe certification will help to enhance the working environment as this gives the continualapproach of improvement.It also provides the better confidence in communication.
  • 101. 101The certification gain higher social & legal compliance level.The facility always tries to avoid any conflict with its external stakeholders, but sometimesany misleading information or any other circumstance can create issues. The certificationprovide better platform to deal with these situations and provides proactive approach.10.1.9. PSYCHOLOGICAL IMPACT ON INDIVIDUALAs the certification enhance the working culture with improved health & safety measures,which indirectly improves the performance of the worker. Sometimes this improvedperformance may act as moral support for continual improvement and value addition of theworker.Less disturbed dailyoperationsWell Social ComplianceStandards & PracticesEnhanced working environmentIncreased motivation &confidence in organisationIncreased PerformanceDecreased risk of daily/minor accidentsBetter Health &SafetyProper ImplementationWell defined role &responsibilityIncreased Productivity
  • 102. 10210.2.FACTORY B10.2.1. GENERAL INFORMATION City: Bangalore State: Karnataka Worker Strength: 1060 Interview Date: 18-04-201210.2.2. CERTIFICATION INFORMATION Certification: SA8000 Status: Certified10.2.3. GENERAL VIEW ABOUT SOCIAL COMPLIANCESA8000 provides a way to ensure that the company is following the required compliancelevel as expected by its buyer. It also benefits the company in retaining its employee and alsoto create a healthy (both physical and mental) and motivated workforce.10.2.4. MOTIVES FOR IMPLEMENTATIONThe basic motive for implementing SA8000 in this facility is to enhance value. The valueconsidered here is related to better working condition for its employees, better image andawareness among the employees regarding their rights etc. the reason for doing this asdescribed by the respondent is that SA8000 certification basically needs the factory to followall the Government regulation that are legal requirements to run the factory. So, by certifyingit with SA8000 doesn‘t require to follow something that could be burden on the factorymanagement, but actually it is the certification that consists of requirements which are alreadybeen achieved. Apart from that SA8000 also provide a management approach which isbeneficial in terms of sustaining the achieved requirements and this is a big advantage ofgetting certified by SA8000 (As mentioned by the correspondent)Self Improvement is another major motivation. By improving itself, the organization tries toattract the higher skilled manpower which is vital especially in an Apparel ManufacturingOrganization.
  • 103. 103Also, SA8000 provides a system for regular evaluation and thereby consistent improvementwhich is not the case with other Social Compliance certification.10.2.5. ECONOMICAL IMPACTNot significant as requirement of certification is almost same as the Requirements by GovtLaws, so they are already in practice and requires not much extra investment.As stated by the respondent, SA8000 certification is actually helping the organization to cutcost. As the respondent has mentioned, being a SA8000 certified facility many buyer placetheir order with the factory without even conducting Social Compliance audit themselves.This happens because those buyers tends to believe that the factory will satisfy all their(Buyer) Social compliance requirements as it already has a social compliance certification(SA8000). This helps the factory in cutting cost in terms of cost of compliance auditing (bothbuyer and third party auditing) which is generally had to be borne by the factory. So, SA8000is not an extra investment rather it is an overall cost cutting tool.10.2.6. OPPORTUNITIESSA8000 helps the organization in increasing reputation as an ethical organization. It helps inhaving a positive impact on all its stakeholders including its employees, buyers, and generalpublic at large. By certifying itself with SA8000 the overall cost regarding Complianceauditing has gone down as buyers are comfortable with SA8000 certification. SA8000certification helps the factory by increasing business with regular buyersAs SA8000 needs the organization to follow a great level of Health and Safety requirementsfor its employees, it leads to less accidents & errors in daily works which in turn results infewer interruptions in working hours.10.2.7. OBSTACLESAwareness Building regarding SA8000 is seen as a major challenge as said by the respondent.Communication the actual objectives of Social compliance with the worker‘s is a challengebecause of misinterpretation about Social Compliance among the workersThe respondent has also mentioned a problem in management that arises because of theSA8000 certification. Being SA8000 certified facility provides less scope to take decision
  • 104. 104regarding HR and other issues on their own as the management have to follow and checkwhether any violation has occurred and try to rectify it.According to the respondent it is also difficult check whether the company‘s whole SupplyChain is following Ethical practices or not.It is also a major concern in a SA8000 certified facility to communicate with worker‘sregarding social compliance because of misinterpretation about it among the workers.Educating and properly implementing health and safety practices like PPE etc is ratherdifficult.10.2.8. SOCIAL IMPACTSSA8000 helps directly and indirectly in uplifting the condition of the society. The Directimpact because of justified wage and other benefits like healthy workplace, medical facilityetc helps in improving the social condition of the employees working in the factory. It alsoattracts more talented people to the organization.Indirect benefits like higher employee motivation and efficiency helps by enabling the factoryto be more productive.As the respondent has mentioned “Following the SA8000 Guidelines is a win-win situationand it is mutually beneficial for both the organization and its employees”10.2.9. PSYCHOLOGICAL IMPACT ON INDIVIDUALHaving social compliance certification like SA8000 boosts the morale of the employees. Theyare now assured that nobody is going to exploit them and it is a boost for their confidence. Aconfident worker only can produce Quality Product.As the respondent has mentioned, it also has a negative side. Sometime the worker will try togain advantage of the restriction put upon the management by the certification and can try toget improper advantage out it. So more awareness and training is still needed in this scenarioand the employees are to be motivated and educated. The key teaching “The factory is goingto look after you, so you in turn should look for the factory” should be initiated into the mindsof the employees.
  • 105. 10510.3. FACTORY C10.3.1. GENERAL INFORMATION City: Bangalore State: Karnataka Worker Strength: 1200 Interview Date: 20-04-201210.3.2. CERTIFICATION INFORMATION Certification: SA8000 Status: Undergoing Implementation10.3.3. GENERAL VIEW ABOUT SOCIAL COMPLIANCESocial Compliance is a major deciding factor in Business today. Certification of SocialCompliance is a key criteria imposed by many apparel buyers. The buyers insist that thefactories where there Product is being manufactured are not only in conformance with theCompliance Standard but also have the proper certification that the Compliance is up to thelevel expected by the buyer.10.3.4. MOTIVES FOR IMPLEMENTATIONThe organization is getting recommended by its buyers to have a Social Compliancecertification. So, it is implementing SA8000 in one of its unitThe SA8000 certification is under process in the organization.Define → Measure → Analyse →Amendments / Correction → Implementation10.3.5. ECONOMICAL IMPACTCost Factor: According to the respondent, lots of expenses and time is involved inimplementationo Audit costo Cost involved in Corrective action
  • 106. 106o Documentationo Training and awareness Buildingo Cost in maintaining the certification (Surveillance Audit every Quarter)Implementing SA8000 involves lots of cost and it seems like a burden for SmallerOrganizationCertification Bodies try to exploit the Company in the name of Corrective actionso CB‘s got linked up with some Consultancy agencies and suggest names ofthose consultancy agencies only for Corrective actionso If the company take Consultancy Services from the Prescribed Consultancy,only then the CB approve the Corrective action, otherwise they (CB) tries tohinder the Certification Process.o Totally Business OrientedCertification cost is an investment of the company which directly does not have any effect onProfitability of the company.Because of the above mentioned fact, Certification is a burden enforced by the buyer and itbecomes tougher when the buyer does not support the certified vendor, in terms of increasedcost of the Product.Return of Investment can‘t be calculated tangibly.Even after complying with all the regulation by the buyer and Certification, there is noassurance of further business, as the other deciding factor for business like Lead Time, Costand Quality are more prominent always.As a Business organization, the certified company have to get back the investment incertification and for doing this, it have to increase the cost of the garment which in turn willlead the company off the competition.10.3.6. OPPORTUNITIESAccording to the respondent, SA8000 or any other Social Compliance certification can beused as an advantage over non certified organizations in getting more orders from the buyer.
  • 107. 107SA8000 makes the organization more reliable and transparent in terms of Social CompliancePractices. It provides the base for an efficient Compliance Management System.SA8000 ensures that all the employees are treated well and receiving the proper benefitsdeserved by them. So, it enhances the bond between Worker and the Organization which inturn increases the motivation of the employees and generates a better work culture.Having Social Compliance certification will definitely lead to more orders or at least canmake the company eligible to get more order.But, in the current scenario there is not much awareness about ―Indian Companies followingethical behaviour‖ among its major market i.e. USA and EU countries. That is why, Govt.agencies Like AEPC, Export Promotion Council should try to create more awareness andconfidence among the major Apparel Buyers, so that the fact that ―Indian ManufacturingFacilities are also following Ethical Approach now-a-days and they also have propercertification in this regard‖ gets highlighted and the companies practising such approachcan use it as a Unique Selling Point (USP) and get more scope out of the Business.10.3.7. OBSTACLE WITH SOCIAL COMPLIANCE CERTIFICATIONSocial Compliance certification takes away the flexibility of business. They can‘t take anydecision freely as they always have to follow SA8000 guidelines in handling all the Labourrelated Issues.According to the correspondent though having certification is beneficial in terms of gettingrecognised, there is not huge difference whether an organization is certified or not for anorganization that follow all the standards of Social Compliance and practise the ethical codesand conducts.According to the respondent there is no transparent and capable authority which can minutelyevaluate the practices by the organization. The respondent mentioned one serious misuse ofcertification. As mentioned by him an organization having multiple facilities can produceproduct in a non certified facility and can ship the product from a certified facility,thereby bypassing the desired Compliance Level expected by the Buyer.The Respondent has also said that following all the guidelines of SA8000 is a little difficult.
  • 108. 108For example, it is easy to ensure that one is following the ethical practices, but it is ratherdifficult to ensure that all your Suppliers are also practising the same behaviour. Hementioned this in the context of Supply Chain Mapping for Social Compliance required forSA8000 certification. As he had mentioned, Supply Chain is totally Business oriented andeverybody tries to get the maximum cost benefit out of it.10.3.8. SOCIAL IMPACTSA8000 makes it sure that all the employees are trained properly. It also ensures that all theemployees are getting proper wage and other benefits without any discrimination. So thecertification creates an environment where nobody have to worry about any issues regardingwage etc , so they can concentrate more on their assigned task, thereby increasing efficiency.10.3.9. PSYCHOLOGICAL IMPACT ON INDIVIDUALMotivation is a big factor that is directly linked with performance level. ImplementingSA8000 requires enhancing various factors (like better wage, safe workplace, compensation,Etc...) which are directly linked with motivation of the employees. SA8000 also increase theconfidence level of the employee because now they can be assured of a proper decisionmaking channel and an efficient complaint management system.
  • 109. 10910.4. FACTORY D10.4.1. GENERAL INFORMATION City: Bangalore State: Karnataka Worker Strength: 400 Interview Date: 24-04-201210.4.2. CERTIFICATION INFORMATION Certification: BSCI, SA8000 Status: BSCI Certified, SA8000 in Planning Stage10.4.3. GENERAL VIEW ABOUT SOCIAL COMPLIANCEThe respondent‘s organization already has a BSCI Certificate. But, it is now planning to havea SA8000 certificate as its buyers are insisting it to do so. According to the respondent,SA8000 is a very robust standard to follow. But being a BSCI certification already will helpthe organization to easily implement the SA8000 guideline as most of their guidelines aresimilar, only difference that exists is that SA8000 has a system approach that not only tellabout what to follow but also provide guidance about how to follow those guidelines.All the Social Compliance certification basically seeks the benefit of all the workers directlyor indirectly involved in producing the product that is the output of the organization. Sohaving a social compliance certification and following it will definitely lead to the upliftmentof the workforce socially as well as economically.Social compliance certification will generally leads to regular audit of the factory, which inturn will give a chance to evaluate oneself for Social Compliance practices and leads to abetter workplace and a standardised management system.
  • 110. 11010.4.4. MOTIVES FOR IMPLEMENTATIONThe organization already has a BSCI certification. Though the certification is up to the levelthat is expected by its buyers, still the organization is planning to have a SA8000 certificationas SA8000 provides a system approach to implement and maintain Social Compliance Level.According to the respondent having a Social Compliance certificate helps in creating anethical outlook among all its stakeholders which is a major factor in Business now-a-days.The Respondent has mentioned that almost all the buyer wants to place their Order in theorganization with Social Compliance certification. So it is necessary for a manufacturingfacility to have a certification that is most appropriate to their Customer.10.4.5. ECONOMICAL IMPACTAccording to the respondent, having Social Compliance certification is a major investmentand the higher management approves those costs only in the hope of retaining its customersand to attract new customers.10.4.6. OPPORTUNITIESSocial Compliance certification helps in improving the Work Culture of the company. It leadsto a healthy work environment as all Safety and Health measures are already in place. It alsoboosts the Employee Morale as the employees are less likely to face any harassment ordiscrimination and there is also a complaint management system is in practice. It also leads togood relationship between the Management and the Employees.Social Compliance certification helps the organization by making it enable to do morebusiness with its regular customer10.4.7. OBSTACLESThe main obstacle with SA8000 certification is that the total cost for certification issignificant. The corrective action as suggested by the Certification Bodies involves lots ofcost.SA8000 requires huge investment in Infrastructure. With rising Infrastructure Cost it isdifficult to exactly implement all the requirements in given time period of time.
  • 111. 11110.4.8. SOCIAL IMPACTSSA8000 and all other Social Compliance will definitely lead to a healthy and progressive(Economically & Socially) workforce which in turn will leads to an Efficient Workplace.10.4.9. PSYCHOLOGICAL IMPACT ON INDIVIDUALFollowing Social Compliance Certification‘s guideline will eventually lead to higherconfidence level among the employees and a responsible management which are good for anyorganization to grow.
  • 112. 11210.5. FACTORY E10.5.1. GENERAL INFORMATION City: Bangalore State: Karnataka Worker Strength: 1000 Interview Date: 30-04-201210.5.2. CERTIFICATION INFORMATION Certification: BSCI Status: Certified10.5.3. GENERAL VIEW ABOUT SOCIAL COMPLIANCESocial Compliance certification helps in creating a positive image among all its stakeholders.10.5.4. MOTIVES FOR IMPLEMENTATIONCompliance Certification helps the organization as it can be used as a tool for setting EthicalPractices in the organization.Buyer Requirements is another main motive for having Social Compliance Certification. Asmore and more buyers are insisting their Supplier to get certified for Social Compliance, it ismuch necessary to have a Social Compliance certification.10.5.5. ECONOMICAL IMPACTSocial Compliance certification involves some extra cost regarding auditing, corrective action etc...But this cost can be justified as Certification has many added advantage. And as viewed by therespondent this costs are not so significant.Social Compliance certification in turn helps the organization by creating a reputation in theBusiness which the organization can use to get more orders from its Buyers and will alsoattracts new customers.
  • 113. 11310.5.6. OPPORTUNITIESAs the respondent has mentioned, Social Compliance helps in increasing the reputation of theorganization and that too without much extra investmentThe implementation of any Social Compliance Certification will lead to a motivated and loyalWorkforceIf Social Compliance certification is in place, there will be Standardized Procedure orguidelines to guide the management in many situations. It makes the running of theorganization smooth and worry free.10.5.7. OBSTACLESAccording to the respondent in apparel industry there is always demand for higher level ofProductivity and Following Social Compliance Practices in those situations don‘t go hand inhand.Awareness Building among the employees (Managerial and Worker level) is to becontinuous; otherwise it won‘t be so effective10.5.8. SOCIAL IMPACTSApart from many economical and social benefits, Social Compliance will definitely boost theemployee morale and make the organization working more effectively10.5.9. PSYCHOLOGICAL IMPACT ON INDIVIDUALIncrease in Loyalty can be one of the results of a good Social Compliance implementation
  • 114. 11410.6. FACTORY F10.6.1. GENERAL INFORMATION City: Bangalore State: Karnataka Worker Strength: 1200 Interview Date: 02-05-201210.6.2. CERTIFICATION INFORMATION Certification: SA8000 Status: Undergoing Implementation10.6.3. GENERAL VIEW ABOUT SOCIAL COMPLIANCESocial compliance is the need of the industry in present scenario. Lots of problem andsituation can be handled through use of Social Compliance and having a certificate of it.10.6.4. MOTIVES FOR IMPLEMENTATIONSocial Compliance certification helps to get the organization recognized as a responsiblebusiness organization among all its stakeholders.It also leads to less audit and other complication in getting orders from the buyers who like touse the criteria ―where as the Producer is Social Compliance certified or not‖ as a keydecision making tool.10.6.5. ECONOMICAL IMPACTImplementing any Social Compliance certification involves lots of cost in terms ofinvestment in infrastructure and Labour welfare. Though Social Compliance certificationleads to more transparency and higher order level from the buyers it is still a concernregarding Return of Investment (ROI)
  • 115. 11510.6.6. OPPORTUNITIESSocial Compliance certification gives the buyers an impression that the organization isfollowing all the Ethical values required for the certification and so they will be more willingto give order to those factories rather than placing the orders with non certified facility.The Compliance certification will also leads to a healthy workplace with high level ofproductivity which will benefit the company.10.6.7. OBSTACLESThe major obstacle in Certification is to implement all the corrective action mentioned by theauditor within a given period of time. As some of the corrective action requires modifying theCompany Policy and some other requires significant cost, it is not possible always to exactlymodify into the state as required for successful certification.Maintenance of certification is another issue. After the certification, company have to takeevery decision based on the requirements of the Social Compliance certification and becomesvery inflexible in taking decisions.10.6.8. SOCIAL IMPACTSAccording to the respondent, Social Compliance certification can leads to improved relationamong the Management and the Employees. It helps in improving the social condition of theWorkforce and making them more focused on work.10.6.9. PSYCHOLOGICAL IMPACT ON INDIVIDUALSocial Compliance certification can boost the Confidence of the Employee making theemployee more focused on his/her work and thereby producing goods of required quality withhigher productivity.
  • 116. 116
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  • 123. 123ANALYSIS
  • 125. 12511.2. KEY CONCEPTTable 22: Analyzed Framework of SA8000NORMATIVE FRAMEWORK(i.e. what to do)Provide substantive guidance on: Clear definitions of roles & responsibility Acceptable level of performancePROCESS GUIDELINES(i.e. how to implement, measure &communicate)Enables measurement, assurance &communication of performance Proper time line to take correctiveactions Well-defined no. of audit daysMANAGEMENT SYSTEM(i.e. how to integrate)Provide integrated or issue specific managementsystem to ongoing management of social impacts Complaint Review SystemSUSTAINABLE DEVELOPMENTSocial Inclusion EnvironmentalProtectionEconomicDevelopmentCORPORATE SOCIAL RESPONSIBILITYCodes of Conduct Social StandardsSA8000InternationalCertification WidelyAcceptedTOOLSIndividualCompanyCodes Varies Multi StakeholderInitiative (MSI)
  • 126. 126Figure 15: SA8000 as QMSQUALITYMANAGEMENTWorkplaceStakeholders/CommunitiesMarketplace Shareholders Customers Financial Analysis Promotion Councils Trade Unions Regional Experts/ LocalCommunities Certification/ ConsultationAgencies Worker Awareness NGOs Government Laws Industrial Standards
  • 127. 12711.3. IMPLEMENTATION PROCESSFigure 16: Approach of RMG Sector for ImplementationDefine/ReviewObjective &PolicyPlan•Communication toPersonnel•FeedbackImplementMeasure•Performance Review &Internal AuditAnalyseImprove•Consultation•Corrective ActionControl•External Verification &Integration withmanagement
  • 128. 128Review thepossibility oftransferring theresponsibilityTransfer theresponsibilityMotivate ParticipationDefine ObjectiveAdaptationDefine Roles &ResponsibilityReviewPolicyCommunicate to PersonnelFeedbackReviewRoles &ResponsibilityImplementation
  • 129. 129PerformanceReview &InternalAuditConsultationCorrective ActionExternal VerificationOKNOTOKFigure 17: Process Flow of Standards Implementation
  • 130. 130 Sometimes CB approves theCAs of those consultants whichare suggested by CB Lack of transparentperformance evaluation system Maintenance Cost Economical benefits may taketime to be seen Costs involved Lack of financial support forsmall industries Sometimes there is excessiveinterfere by externalstakeholders & certificationbodies. View of management differsfrom person to person Workers do not feel involved inshared vision Unwillingness to implementstandards due to involved cost Lack of motivation Lack of awareness amongworkers Ineffective communication ofstandard t the staff which leadsto a situation where they finddifficulties to reach out to theworkers with the information Lack of involvement ofmanagement at all levelsCreating a sharedvisionDevelopingunderstanding & abilityImplementationsFeedback,recommendation &ImprovementsDialogue withworkers, unions,NGOs, andworkerrepresentativeDialogue withotherStakeholdersFigure 18: Different Phases of Implementation & Concerned Issues
  • 131. 13111.4. OVERSIGHT OF CERTIFICATIONSTAKEHOLDERAUDIT Duplicate AuditAUDIT Accreditation Audit Shadow AuditSAI SAASCBFACILITYNon-Government,Multi-StakeholderOrganisationCOMMUNICATION(Oversight on SA8000Requirements Records Process)TRAINING Auditor Course (5 daybasic course) Audit Process (3 dayadvanced course) Skill/ Professionaldevelopment TrainingAUDIT Certification Audit Surveillance AuditCOMMUNICATION SA8000Requirements CorrectiveActionsRequest RecordsTRAINING Understanding therequirements ofSA8000 & itsrelationship withother Standards Auditor Course (5day basic course)TRAINING Understanding ofrequirements of SA800 PerformanceEvaluation System Integration ofManagement Systemwith SA8000TRAINING Understanding therelationship ofSA8000 & otherStandards PerformanceEvaluation SystemConsultancyASSIST Corrective ActionReview & AdvisoryCommitteeCOMPLAINTMANAGEMENTSYSTEM
  • 132. 13211.5. MANAGEMENT LEVEL DATA ANALYSIS11.5.1. AWARENESS LEVELGraph 20: Awareness about Social Compliance & SA8000During the interview we found that at any facility, middle management is fully aware aboutthe social compliance. The management level knows the importance of compliance standardsand related certifications. They understand the concern of the human side of business andneed of the scenario. The management takes those standards & certifications as one of majorfactor to gain the confidence of the buyer & thus to improve the value in the market.According to the management, the social compliance & related laws are minimumrequirements; the present scenario is compelling to go beyond these requirements. The awareness level about the social compliance and its importance is irrespectivefrom the size of facility. This shows the importance & scope of the social compliance. This supports the Hypothesis H112012002468101214Yes NoNOOFRESPONDENTSRESPONSEAwareness about SocialComplianceAwareness aware about SA8000
  • 133. 13311.5.1.1. ‘COC’ OF BUYERS Vs SOCIAL COMPLIANCE CERTIFICATIONGraph 21: Code of Conduct Vs CertificationAccording to the management 90-95% of COC are same of each buyer (statutory requirements) 5-10% varies from buyer to buyer.Most of buyer have their own audit process and conduct their own audit, separately. Forseparate buyers, the facility has to pay for audits of each buyer. But the certification of socialcompliance and standards, like SA8000 which are of 2ndgeneration, avoids the frequentaudits and subsequent cost, just because these standards are worldwide accepted.Graph 22: Certification Status423 3012345Yes NoNOOFRESPONDENTSRESPONSECode of Conduct for SocialComplianceCertified regarding SocialCompliance310201234Undegoing CertifiedNOOFRESPONSECERTFICATION STATUSStatus of Cerification (SA8000)Status of Cerification (BSCI)
  • 134. 134Among these respondents, who were BSCI certified, mentioned that SA8000 is 2ndgenerationcertificate.• Much concerned about worker‘s benefits and goes far beyond the minimumrequirement of social compliance.11.5.2. BENEFITS OF THE SA8000 CERTIFICATIONGraph 23: Benefits of Certification towards the organisationDuring the interview, everybody accepted the importance of the social compliancecertifications. First of all it helps to create positive image of the facility as ethical facility &promotes the brand value of the organization. Major aspect to gain the confidence of the buyer to place an order.Nowadays there are global buyers who weigh the human side of business as equal aseconomic aspect. Widely accepted and appreciated for its CSR activities & ethical practices and wellknown for their initiatives of ‗Responsible Business‘. Walmart & Nike are example of those buyers. This gives the value addition to Hypothesis H1.111024681012YES NONOOFRESPONDENTSRESPONSE
  • 135. 135Figure 19: Classification of Benefits of Social Compliance Certification11.5.2.1. SOCIAL BENEFITSGraph 24: Social Change Due to Compliance CertificationIMPACTBUSINESS IMPACTSOCIALInternalImpactExternalImpactECONOMICALInternalImpactExternalImpactPSYCHOLOGICAL6563 310102100 0 0 0230 0 010201234567WorkingHours (perweek)MinimumWages (perday)ChildLabourSupplyChainMappingNo of Audits(perquarter)LabourTurnover(attrition)RateNOOFRESPONDENTSCRITERIASameIncreaseDecrease
  • 136. 136Graph 25: Effect of Certification on Labour Turnover & Occupational AccidentsGraph 26: Effect of Certification on Work CultureAccording to the respondents, the social changes can be seen through the properimplementation of standards but if you want to measure it, the changes will take a span oftime to become measurable and this span totally depends upon Implementation level of standards Knowledge of workers Understanding of management Relationship & communication of management & worker.2 21 1032101234Same ModeratelyDecreasedSignificantlyDecreasedCant SayNOOFRESPONDENTSRESPONSEOccupational Accidents(per year)Labour Absenteeism(per month)032101234Same Moderately Improved SignificantimprovemnetCan’t SayNOOFRESPONDENTSRESPONSE
  • 137. 13711.5.2.2. ECONOMICAL BENEFITSGraph 27: Increase in No of BuyersGraph 28: Business GrowthAccording to the technical managers of the samples, Social compliance is one of significantNTM faced by Indian Exporters. Since, NTMs filters the business rather than restricting sohaving a compliance certificate, especially SA8000 which is widely accepted by all countriesand sectors, will enhance the scope of better & further business.023101234No Effect 1 to 3 4 to 6 more than 6NOOFRESPONDENTSINCREASE IN BUYER0123012345-10% 10-15% 15-20% 20-25%NOOFRESPONDENTSBUSINESS GROWTH (%)
  • 138. 13811.5.3. MOTIVES FOR THE CERTIFICATIONGraph 29: Radar graph for rating of different motivesGraph 30: Rank of different motivesThe top two weighed motives are business (economy) oriented, hence we can say thatcertification regarding ‗social compliance‘ is one of major tool to promote the reputation &brand value in the market and gain more business.• While the social motive is at the fourth weighed rank. This supports the hypothesis H1.01234567812345678Buyer RequirementsLegal ComplianceImproved Reputation in MarketWorker’s BenefitsEthical OutlookFewer Buyer AuditsCost ReductionShorten Lead Time0.510.630.901.03 1.03 1.061.501.720.000.501.001.502.00WEIGHTAGEMOTIVES
  • 139. 13911.5.4. OPPORTUNITIES ASSOCIATED WITH CERTIFICATIONGraph 31: Radar Graph for rating of opportunitiesGraph 32: Rank of OpportunitiesThe top ranked opportunity is economy oriented; hence we can say that certificationregarding ‗social compliance‘ is one of major tool to promote the reputation & brand value inthe market and gain more business.• While the top most social opportunity is at the fourth weighed rank. This supports the hypothesis H1.024681012345678Increased Business withregular BuyersAttraction of New BuyersGood WorkingEnvironmentHigher Quality &ProductivityLower Labour TurnoverMore confidence & focus inBusinessBetter Worker-ManagementRelationship0.690.84 0.880.971.23 1.281.391.560.000.200.400.600.801.001.201.401.601.80WEIGHTAGEOPPORTUNITIES
  • 140. 14011.5.5. OBSTACLES ASSOCIATED WITH CERTIFICATIONGraph 33: Rank of ObstaclesThe top ranked concern about SA8000 is worker‘s education & training cost.• According to one of respondent, if they are more aware about the rights, there will bemore opportunity to misuse the rights. This supports the hypothesis H2.• Some other obstacles were also mentioned by the respondents are the following:i. Lack of free hand in decision process, you have to follow the guidelines ofSA8000ii. There may be excess disturbance to create inconvenience & pressure on themanagement.iii. Lack of transparency by some certification/ auditing bodies.0.64 0.670.80 0.820.88 0.88 0.901.09
  • 141. 14111.5.6. PRACTICES & POLICIESGraph 34: Availability of AssociationGraph 35: Different Health & Safety CommitteeThere is no availability of employee association at the sampled facilities, but committeeregarding various aspects like fire safety, first aid, kaizen, Employee welfare exist in manyFacilities.0601234567Yes NoNOOFRESPONDENTSRESPONSE0 2 4 6 8Formal Health & Safety CommitteeFire SafetyElectrical SafetyMaintenance of MachineryNO OF RESPONDENTSNOYES
  • 142. 142Graph 36: Practices to ensure the ‘Health & Well Being’ of EmployeesGraph 37: Practices to ensure the safety of workers at workplace6 6401234567Providing Medical Aid incase of any injury arisingoutside of the WorkplaceProviding amenities like cleandrinkingwater, Canteen, Toilet etc.SOP for the maintenance ofthe above mentionedamenitiesNOOFREPONDENTSPRACTICES6 6101234567Providing PPE Conduction of SafetyTraining for EmployeesSOP in case of any probableSafety related issueNOOFRESPONDENTSPRACTICES
  • 143. 143Graph 38: PPE at FacilitiesSince, health &safety is one of more concerned aspect for major nonconformity of SA8000,so the industry is taking some solid measures to ensure the facilities up to the standard. As these practices are visually measureable, so factories are taking more organisedway to resolve these.Graph 39: PPE Training0 1 2 3 4 5 6 7Cutting GlovesRespiratory MasksBootsEar PlugsGogglesProtective ClothingSafety Devices (Machines)NO OF RESPONDENTSNot RequiredUtilizedAvailableRequired6001234567YES NONOOFRESPONDENTSRESPONSE
  • 144. 144Graph 40: Maintenance TrainingTo ensure the safety of workers at work place, the factories are conducting regular PPE,maintenance, and safety trainings like fire safety, even few factories are discussing on theadvanced medical safety training.Graph 41: Maintenance Record Keeping510123456YES NONOOFRESPONDENTSRESPONSE42012345YES NONOOFRESPONDENTSRESPONSE
  • 145. 145Graph 42: Broken Needle Log MaintenanceTo ensure the proper status of the machines & its maintenance, the factories are regularlykeeping the track of the records. These practices avoid the daily breakdowns and loss. As wellas these practices maintain the well running condition of machines and provide a proactiveapproach to avoid minor injuriesGraph 43: Practices to avoid Child Labour6001234567YES NONOOFRESPONDENTSRESPONSE56301234567Written Policy for notemploying Child LabourPolicy for Checking Ageduring employingPolicy for continuous checkingfor suspected Child LabourNOOFRESPONDENTSPRACTICES
  • 146. 146Graph 44: Policy to avoid Forced LabourGraph 45: Policies for Required increment in working hours313 301234Discussion Company policy Awareness Building MentoringNOOFRESPONDENTSPRACTICES3 301234Overtime Overtime after DiscussionNOOFRESPONDENTSPOLICIES
  • 147. 147Graph 46: Practices for Proper RemunerationGraph 47: Discrimination PreventionGraph 48: Practices for Complaint Management6401234567Grading of the employees based on their skilllevel/experience/seniorityPerformance Linked PayNOOFRESPONDENTSPRACTICES6501234567Written Policy regarding theprevention/invention of DiscriminationPolicy for finding any case ofDiscriminationNOOFRESPONDENTSPRACTICES5 510123456SOP for ComplainManagementCommittee for looking intothe complaintsConsulting higher authorityNOOFRESPONDENTSPRACTICES
  • 148. 148Graph 49: Practices for Disciplinary ActionsGraph 50: Practices for Evaluation of Compliance LevelFrom the above plotted graphs, it can be concluded that for the implementation &maintenance of compliance standards, companies are formulating Standard OperationProcedures and integrating those SOP with management policies.4601234567SOP for proper investigation before takingany decisionGiving fair chances to employee to defendher/him selfNOOFRESPONDENTSPRACTICESPRACTICES FOR DISCIPLINARY ACTIONS64430 1 2 3 4 5 6 7SOP for maintaining the compliance levelVisiual aid to educate all the employeesContinuous evaluation & mistake proofingR&D for enhancement of the WorkplaceNO OF RESPONDENTSPRACTICES
  • 149. 14911.5.7. SUPPLY CHAIN MAPPINGGraph 51: Sub-Contraction & Supply Chain MappingGraph 52: Factors Mapped in Supply ChainAccording to the management teams, supply chain mapping is not a so much difficult task.But the business oriented aspect of the supply chain, hinders the complete & transparentscrutiny of it, according to the requirements of social compliance standards. This is a majorchallenge to ensure the standard & practices of the suppliers being economical as well.2442012345YES NONOOFRESPONDENTSRESPONSESub-contraction/sourceof any productionprocessSupply Chainmapping for yourproducts332222311222210 1 2 3 4Child LabourMinimum Wages are paidWorking HoursAwareness of customers aboutsuppliersFurther Sub-ContractionChild Labour/ Forced Labour Byfurther Sub-ContractorsGuarantee Letter about abovementioned criteriaNO OF RESPONDENTSNoDon’t KnowYes
  • 151. 151Graph 56: AWARENESS ABOUT GUIDELINE OF CERTIFICATIONFrom the above plotted graph, it can be concluded that there is need of awareness building atbottom level (operators) for social compliance & its standards. The management level shoulddevise a communication programme to make the operators aware about the standards11.6.2. VIEW ON IMPROVEMENT RATE OF REQUIREMENTSGraph 57: View of Labours on Improvement Rate of the basic facilitiesYES19%NO81%05101520253035WORKCULTURE LIGHTINGOF WORKAREASTEMPERATURENOISELEVELBEHAVIOUR OFADMINIS…DISCRIMINATIONFORCEDLABOURCONDITIONOF PPEFIRESAFETYMEDICALFACILITYMACHINESAFETYDRINKINGWATERFACILITYCANTEENFACILITYTOILETSCHILDCAREFACILITYSAMEIMPROVINGNOT AWARE/CANTSAY
  • 152. 152Maximum of the operators are happy with the improvement rate of PPE, Fire Safety & otherHealth facilities & benefits. They are also satisfied with the improvement of work culture andbehaviour of administration.Graph 58: View of Labours on Improvement Rate of the WAGES & BENEFITSGraph 59: View of Labours on Improvement Rate of the OVERTIME161527141727SAMEINCREASEDNOT AWARE/ CANTSAYNO OF RESPONDENTSRESPONSEBENEFITS WAGESSAME35%DECREASED27%NOT AWARE/CANTSAY38%
  • 153. 15311.6.3. VIEW ON CURRENT SCENARIO OF REQUIREMENTSGraph 60: CURRENT SCENARIO OF FOLLOWING CRITERIA/FACILITIESFrom the above plotted graph, it is clearly visible that operators are worried about thecondition of basic amenities like drinking water facilities, toilets etc. The management shouldtake care about these facilities.0 10 20 30 40Work CultureLighting of work areasTemperatureNoise LevelBehaviour of AdministrationDiscriminationForced LabourConditions of PPEFire SafetyMedical FacilityMachinery SafetyDrinking Water FacilityCanteen FacilityToiletsChild Care FacilityNO OF RESPONDENTSDisgustingVery BadBadModerateGoodVery GoodExcellent
  • 154. 154Graph 61: View on Training & its importanceTraining programmes are becoming popular to ensure the health & safety at workplace andthese programmes are getting positive feedbacks from the concerned operators. Theseprogrammes have enhanced the level of health & safety with increased performance and lessrisk.Graph 62: Decision on OvertimeAt maximum facilities, the overtime is decide by management especially for the operatorswho are not at up in matrix skill.111817642120441510324187830 5 10 15 20 25EXCELLENTVERY GOODGOODMODERATEBADNO OF RESPONDENTSRESPONSEMACHINERYMAINTENANCE TRAININGPPE TRAINNGFIRE SAFETY TRAININGJOB TRAININGDISCUSSION47%DECIDED BYMANAGEMENT53%
  • 155. 155Graph 63: Compensation for OvertimeThe trend of bargaining is abundant for the compensation for overtime. The ‗2X NormalWage Rate‘ is paid only to supervisor and experienced operators who are working at thefacility from long time.Graph 64: Benefits provided to Operators2 X NORMALWAGE RATE55%FIXED (BASIC +ALLOWANCE)13%(BARGAININGFORALLOWNCES) +FIXED32%54482330202728195256120102030405060Provident FundMedical BenefitGratuityChild CareEarned LeaveSubsidized MealPaid Sick LeaveFull & FinalSettlementTransportBonusPaid MaternityLeaveTOP 5 BENEFITS IN RMG SECTOR• BONUS• PF• TRANSPORT• MEDICAL BENEFIT• CHILD CARE
  • 156. 156CONCLUSION
  • 157. 15712.CONCLUSIONThe Term ―ethical‖ is a doubtful term. What may be ethical to one person may be not ethicalto another person. It is dependent upon various Cultural, Geographical, Social, Economicalfactors around the world and also from Organization to Organization and from Person toPerson.So, there can‘t be a wholly accepted Guideline for Social Compliance. Only thing that can bedone in this case is to bridge those gaps among the ―Accepted and expected EthicalBehaviour‖ and formulate a standard that can be mutually agreeable among all the involvedParties. That is where SA8000 and all other Social Compliance certification come into place.All the Social Compliance Certification has almost same basic criteria and still they vary interms of the required Performance Level expected from the Certified Facilities.So, each manufacturing facility tries to have the Certification most convenient for them interms of aspects like Economical factors, Company Policy and Practices, Laws Prevailing inthe country etc. The Buyers also looks for Manufacturing Facilities having the Certificationthat is most suitable for the Buyer in terms branding their Products that they have beenproduced in factories that are in compliance with Ethical Values expected out of them.By proper implementation and certification of SA8000 or any other Social ComplianceCertification, they Workers are eventually getting benefited. Still there is much scope ofimprovement in Worker‘s Awareness Level regarding Social Compliance and its benefits.They are also to be provided with the understanding that they should work with motivationand more productivity to get more benefit out of Social Compliance.Much improvement could be seen in Apparel Manufacturing fields due to Social Compliance.Improvement in Work Culture and Health & Safety can be seen already. Still there existsmuch scope of improvement in basic amenities like Drinking Water, Canteen Facilities andToilet etc. Lack of clear Management Policy is still an issue. Though management may bepractising up to the expectation, there can be much scope of variability and misuse of powerif no management policy exists. So, the organization should try to formulate Policy andStandard Operating Procedure and bring awareness about them to move towards a SystemDriven Organization.
  • 158. 158Need of transparency and effectiveness of Social Compliance is still a concern. So, moreextensive capacity building activity should be organised to target these scenario. ATransparent Certification Process is the need of the day.The major obstacle organizations are facing in regard to certification is not in getting thecertification but sustainably maintain it. As Apparel Industry is a Labour and Time drivenIndustry, it is difficult to effectively maintain Productivity as well as humane factor at thesame time.The basic approach in the whole topic ―Social Compliance‖ should not be directed to howmuch certification an organization should have or how much compliance they are following.The objective of each organization should be to judge where they stand regarding EthicalBehaviour and Practices and try to be ahead in practicing Ethical Behaviour. Then only, theSocial Compliance will be more effective and it will be beneficial to the organization in allterms both internally and externally.
  • 159. 159BIBLIOGRAPHY
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  • 163. 163ANNEXURE