Absence of labour standards and minimum wages in 'informal' part of garment industry (homebased work)
Top-down monitoring has limited effect as it cannot ensure buyer's social compliance in the 'invisible' part of the garment industry.
Outsourcing and Labour standards: a Paradox
In order to cut down on costs and be competitive, multinational garment companies have increasingly outsourced their production to developing countries. Similarly, in developing countries, companies have outsourced certain processes into the informal sector through middle men who distribute garments into individual households and deliver the same back into the factory. Today, a significant part of job work stitching, hand embroidery, finishing processes is done in homes under highly exploitative situations. The absence of labour standards in the informal and 'invisible' part of the industry brings in an opportunity to avoid additional costs for infrastructure or social protection; however the flip side of this is that quality standards of industry have progressively declined as most cost cutting is done at the expense of the workers' safety and skill development.
Increased pressure from consumer groups on companies to comply to labour standards and basic worker's rights in sub-contracting units and sweatshops has led to a vast number of labels and code of conduct policies entering the markets, which work towards achieving these standards in their outsourcing companies (buyers). In practice however, buyers fail to monitor and control each manufacturer's employment practices effectively, given the fact that a significant part of the production is outsourced and dispersed into the informal sector. The 2-year experience of MAYA ORGANIC in the sector has led to the conclusion that unless there is a clear commitment in the management towards social compliance, price is still the main factor for production, even though compromises are made on labour standards and quality.
