Global Value Chains, Codes of Conduct and Impact on Working Conditions

1. Global Value Chains, Codes of Conduct and Impact on Working Conditions CSRD 4 October 2010

2. Introduction • 3rd Module & Summary (Short) • Exercise: Impact of Codes of Conduct in the textiles and clothing industry in Southern Africa • Presentation: GVCs, Codes of Conduct & Impact • Oral mid-term evaluation

3. Summary • What is Participation? • Empowerment, process and accessible tools • Citizen Control, Delegated Power, Partnership, Placation, Consultation, Informing, therapy or Manipulation • Inclusion versus exclusion • Representation, conflicting interests, power • Outcome reflects interplay between state-, company- and community-based strategies

4. Linking 2nd and 3rd Module • Impact Assessment and Participation + Global Value Chains (GVCs) and Codes of Conduct • Some viewpoints: IA and Participation should be Linked • IA & Participation in GVCs – Workers’ situation • Codes of Conducts as means to change sweatshop like working conditions into proper conditions(?)

5. Exercise: Codes of Conduct in the textiles and clothing industry in Southern Africa • Textiles and Clothing industry (Bezuidenhout and Jeppesen, forthcoming) * CSR/Code of Conduct (Jenkins et al 2002) • Policy statement that defines ethical standards for corporate behavior * The effects of voluntary standards/public authority – in a setting with limited governmental regulation?

6. Exercise: Codes of Conduct in the textiles and clothing industry in Southern Africa • Textiles and Clothing industry (Bezuidenhout and Jeppesen, forthcoming) • Key industry – also for developing countries • Global industry, divided amongst multiple firms • Chains governed by lead firms (US, Europe and increasingly Asian (Chinese)) • Emerging industry in Southern Africa (historically in South Africa, ’new’ to Lesotho and Swaziland)

8. Exercise: Codes of Conduct in the textiles and clothing industry in Southern Africa • Impact of Codes of Conduct (methodology – similar to ETI and Nelson et al. 2007): • Firms (managers and employees) • The industry (GVC, power and organisation) + Unions and NGOs • Government • The context (country, history etc)

9. Exercise: Codes of Conduct in the textiles and clothing industry in Southern Africa Questions: • Which impact on the working conditions do the Codes seem to have? • Do the Codes address the key issues, seen from the workers point of view? • What are the interests involved, e.g. compared to the Kasur case?

10. Global Value Chains (GVCs) • Global Value Chains (N&P 2009) • Economic Geography perspective on industrial organisation: * time (when) and space (where) matter + sociology and business studies • Overview of different perspectives: E.g. Commodity, Supply and Value Chain perspectives and Global Production Networks

11. Global Value Chains (GVCs) • Global Value Chains (N&P 2009) • Theoretical understanding: ‘Input-Output structure, territoriality (geographical dimensions), governance structure (+ institutional framework)’ • Empirical understanding: ’Include the full range of activities that are required to bring a product from its conception to its end use and beyond including design, production, marketing, distribution and final customer support’

12. Global Value Chains (GVCs) • Global Value Chains (N&P 2009) • Global organisation of industrial activities – how tasks and responsibilities (and power) are divided amongst multiple firms • Chains governed by lead firms • Buyer and producer-driven chains • With inspiration from business studies (transactional cost economics – Gereffi et al. 2005) more nuances: Market-based, Relational, Modular, Quasi-Hierarchical, Hierarchy

13. Global Value Chains

14. Global Value Chains • Developing Country Perspective: • How to move up the value chain? • Upgrading • What need Developing Country Governments do? • What need/can Developing Country Firms do?

15. Global Value Chains • GVCs Critique: Ignores Institutions & Relations (at the bottom of the chains) • Assumption: GVCs – as Transnational Spaces - Penetrate Geographically Bounded Localities • Replace Local Institutions/Forms of Economic Coordination with Global Ones • Local Institutions and Forms of Economic Coordination Transform GVCs? • Value Chain Struggles: Defining Forms of Governance & Types of Institutions • SJ: Also Developing Country Firms to be understood!

16. Codes of Conduct • Code of Conduct (Jenkins et al 2002) • Policy statement that defines ethical standards for corporate behavior • Individual firm, Industry and/or International organisations • Why Codes – Why now? • Similar to Haufler + Utting & Zammit • Neo-liberal move & State failure (legitimize absence of statutory regulation) • MNCs gained power – can ‘best’ handle requirements (substitute)

17. Codes of Conduct • Code optimists (Jenkins et al 2002) • Driving Up Standards • Access to Information • Improve Process and Quality • Code Pessimists • Rhetoric vs. reality • Company codes vs. union and NGO codes • Whose voices/interest are heard? • Monitoring and verification

18. Multi-stakeholder Initiatives • ETI (Ethical Trading Initiative) – Base Labour Code (2006) • Critique of individual company codes: Limited rights, limited enforcement & monitoring, limited impact • Collaboration between stakeholders (firms, unions, NGOs and government) – Multi-stakeholder Initiatives • Expand rights (including Freedom of Association) • Strengthen enforcement through monitoring & auditing • IMPACT?

19. Multi-stakeholder Initiatives • ETI (2006) - Impact Assessment (by Barrientos and Smith, IDS) • Numerous improvements (working conditions, Safety and Health) • However, also limitations, e.g. Problems regarding Freedom of Association! • In particular permanently employed workers • Less improvements for casual and migrant workers • Numerous improvements suggested! • Key issue: Improvements from Codes counteracted by retailers ‘procurement practices’!

20. Codes of Conduct & Impact on workers conditions Nelson et al. (2007): • Also multi-stakeholder initiatives • Locally driven – WIETA + HEBA • Do Codes make a difference? • Code adapters versus Non-adapters • 3-years study • South African Wine and Kenyan Horticulture

21. Codes of Conduct & Impact on workers conditions Nelson et al. (2007): • Codes adapters better – on all accounts! • Most casual workers – and percentage increased over time • Permanent workers better than casual – and increased over time • Male better than female – and increased over time • Low level of unionisation • Low level of awareness of codes

22. GVCs, Codes of Conduct & Impact • Individual Codes & Multi-Stakeholder Codes Are Flawed • Policy Options • Jenkins: Enhance governmental regulation • Nelson et al: Strenghten workers and unions, look for alternative approaches • ETI: Expand collaboration, drop individual codes, counteract retailers procurement practices

23. GVCs, Codes of Conduct & Impact • What do we know about Impact of Codes? Myth or Magic? • Know little • Codes better than no codes + MSI better than individual company codes • Permanent (male) workers better off • Casual (female) workers not & little change

24. Next Session (Week 41) • SMEs and CSR: A business case or a means of exclusion? • Jenkins, H. (2004) – Perceptions of SMEs • Luetkenhorst (2004) - The business case for SMEs • Fox (2005) – An agenda for SMEs and CSR • Vives (2006) – SMEs & CSR in Latin-America

25. Oral mid-term evaluation A chance to reflect on the course to date! • What has worked (well)? • What has worked less well / could be improved or changed?