Structural adjustment in Canada - Garment Workers (May 2001)
In Canada, CASA is being undertaken by a Steering Committee of non-governmental organizations from a number of sectors, including labour, development and anti-poverty organizations. As Canada does not receive structural adjustment loans from international financial institutions, the Steering Committee in Canada chose to focus on the 1995 budget, in which the federal government pushed through many structural adjustment reforms, reforms recommended to Canada by the IMF in its Article IV consultations. A first national forum was held, December, 1998 from which four research areas were chosen:
Quantitative and participatory research were undertaken over the following twelve months. Eight regional dialogues were held with the economically disadvantaged to discuss the fourth research area. A second national forum was then held in January 2000 to discuss the results of this research. Four sectoral consultations were held to address the other research areas. The research remains to be synthesized and published.
Globalization, Garments and Governments: The Impact of Globalization on the Canadian Garment Industry
Introduction: On a global basis, the apparel industry, together with the textile industry, is the largest source of industrial employment in the world. Clothing and textile are the most globalized industries in the world, with export production occurring in every corner of the globe. The apparel industry worldwide, employing over 7.5 million people, has drastically restructured in recent years with production moving from developed to developing countries.
Apparel production in the 1990's is in some ways an extreme example of globalization at work. How, by whom and under what conditions clothes are made is in a radical process of change due to trade liberalization, economic restructuring, deregulation and new technologies. The globalization of the garment industry is taking place within the broader context of globalization and free trade policies, rural-urban migrations, political and human rights struggles, and a profound division of labour based on gender and race.[i]
Restructuring is hitting garment workers in a variety of ways; through plant closures and job loss, retailers and manufacturers mobility, imports, work intensification in factories, low waged homework, and a deregulated labour market. The Canadian garment industry and the workers in that industry have been systematically abandoned as governments and corporations jockey for position in the new global marketplace. This abandonment is not accidental, it is the direct result of a series of economic and fiscal policy decisions designed to support a “competitiveness agenda”.
The competitiveness agenda is a fairly coherent package of reforms primarily aimed at opening global markets and redefining the role of government, as it affects this sector, including:
increased capital flight, free trade and globalization;
the government’s withdrawal from funding social programs, especially child care and ESL;
the lack of a coherent sectoral industrial strategy and government support for technological advancement;
the provincial governments’ lack of enforcement of employment standards.
The active pursuit of these strategies has led to an intensification of international competition and increasing import penetration which in turn has contributed to a downward pressure on wages, lower unionization rate, and labour standards violations.
This paper will explore the lethal mix of industry restructuring and changing federal policies and their impact in the 1990's on Canadian garment sector workers, particularly those employed in the Toronto area.
Global De-Regulation: Trade Policy What is happening in the Canadian garment industry, and the impact borne on the most vulnerable workers, must be examined within the broader context of global economic restructuring. A recent report from the International Federation of Textile and garment workers stated: “As many as 160 countries are producing fashion goods for export into the markets of only about 30 nations, pitting countries, companies and workers in unprecedented competition with each other which, when accompanied by government inaction in the application of labour legislation - too often the case- generates insecurity and a downward spiral in labour standards”.
Apparel production is labour intensive, set-up costs are low, barriers to entry are few and rates of return can be high. Many low-wage developing economies with abundant labour supply have attracted heavy investment in the apparel industry. This has resulted in consistent growth in apparel production levels among low-wage supplier countries with a focus on selling to the world. The ILO reported that developing countries have doubled their share of world clothes exports from 30% in the early 1970's to over 60% by the mid-1990's.[ii] By the late 1990's, China had become the world leader in clothing exports. In 1996, China exported garments worth $47 billion, or 29% of world exports.[iii]
Competitive pressures to cut costs coupled with a liberalized trade regime have led to a structure of outsourcing production to locations where wages are low and labour rights are not respected.
Choice of the location of production is largely determined by relative costs. In several Asian countries, labour costs were found to be as low as 0.5% of the retail price. Labour costs are reduced not only by relocating but also by subcontracting to smaller production units and homeworkers who are paid considerably less than factory workers.
Southern governments have created export processing zones[iv] offering foreign garment companies access to a cheap labour force along with other incentives for companies operating in these zones. Low or non-existent taxes, lax enforcement of labour and environmental standards, restrictions or bans on the right to organize, and duty-free importation of semi-manufactured goods to be assembled and then re-exported are all offered to lure investment into their countries.
It is estimated that 500,000 workers are employed in the free trade zones of Central America and the Caribbean, producing goods for the U.S. and Canadian markets. Most of them are young women and girls. Fifteen year old, Wendy Diaz describes the conditions at Global Fashion, a factory in Honduras, where some of the clothes were being produced for Wal-Mart and workers earn about US$900 a year:
I live in a one-room home with eleven people. I have to work to support me and my three little brothers. At Global Fashion there are about 400 workers, about 100 girls like me - thirteen, fourteen years old - some even twelve. On one job we were forced to work almost every day from 8:00 a.m. to 9:00 p.m....Sometimes they kept us all night long, working....Working all these hours, I made at most 240 lempiras which is 31 U.S. cents. No one can survive on these wages. The supervisors insult us and yell at us to work faster. Sometimes they throw the garment in your face, or grab and shove you. The plant is hot like an oven. The bathroom is locked and you need permission and can use it twice a day....We have no health care, sick days or vacation. The company threatened to fire all of us if we tried to organize.[v]
These “free-trade zones” are also undermining Southern country’s domestic industry. Prior to NAFTA, Mexico had a relatively solid domestic apparel manufacturing industry, of which the maquiladora sector represented only 11.7% of production in 1980. By 1990, this had increased to 46%. In 1995, the second year of NAFTA, the maquila sector represented 74% of manufacturing. The domestic clothing industry had by that point virtually disappeared.[vi]
For the past 25 years, international trade in textiles and clothing has been regulated by an agreement between developed and developing countries called the Multi-Fibre Arrangement (MFA) (or World Textile Agreement). Originally intended to provide “temporary” protection to domestic producers in developed countries while progressively liberalizing world trade in textiles and clothing products, the MFA actually became one of the most restrictive sets of trade rules. Created in 1974 to regulate international trade in textiles and clothing, the MFA is not one agreement, but consists of a whole series of bilateral agreements, which were negotiated country by country, to set quotas on the importation of textiles and clothing from developing to developed countries.[vii]
The MFA has allowed for selective supply restrictions vis-a-vis a country or a group of countries, but has primarily served to protect garment industries in first world countries by slowing down the pace of globalization. The Uruguay Round of multilateral trade negotiations, held from 1986 to 1994 under the GATT, concluded with a new agreement, the Agreement on Textiles and Clothing (ATC). Under the ATC, the MFA quotas will be phased out and rescinded in 2005 and international trade in textiles will be put back under normal GATT/WTO rules.
Unions have concerns that the unrestricted import of textile and garment products from the south will lead to considerable job loss, although even with the protection of the MFA there has been large scale job loss. The end of the MFA is expected to have a serious impact on the garment industry because different countries will be in direct competition. The countries and regions that will most likely benefit are those with lower labour and production costs. Ending the quotas on the cheapest producers will allow them to undercut slightly better off countries.[viii]
The impact of global restructuring on garment workers in the South has been severe. The inequitable system of global regulation of the apparel industry sustains an international industry characterized by poverty level wages, workplace harassment, mandatory overtime, few independent trade unions or controlled unionism; where pregnant workers are fired, and union organizers face job loss, imprisonment or death. With further de-regulation, garment workers around the world will face increasing pressure to compete against one another for low wage, non-union jobs with worsening working conditions.
Canada: The Free Trade Agreement, NAFTA and a Competitive Agenda “Imagine a sweatshop, and you are likely to picture a scene in Asia or Central America. But unprecedented international competition in the fashion industry, as well as the greed of those that run it, have caused a downward spiral in labour standards worldwide - including in many countries that thought they had eliminated sweatshops forever. So today you’re as likely to find a sweatshop in Toronto as in Bangkok”. Neil Kearney, General Secretary, ITGLWF [ix]
The garment industry has always been a very fragmented and turbulent industry. Through the 1970's and 1980's the Canadian apparel industry benefitted from significant import protection and adjustment assistance. In the late 1980's, however, protectionism gave way to trade liberalization. Since the signing of the Canada-U.S. Free Trade Agreement (FTA) in 1988 and the NAFTA in 1994, the Canadian garment industry, like the garment industry globally, has undergone a major restructuring. The negotiations of the Canada - U.S. Free Trade Agreement, concluded in 1988, was very much part of a wider federal government agenda of deregulation, privatization and “structural reform” consciously intended to promote broader powers for market forces.
The Free Trade Agreement was liberalizing in the sense that it eliminated, or phased out, remaining tariff barriers. Prior to the agreement, one third of Canadian industrial production was protected by meaningful tariffs of 7.5% or higher, with tariff protection being particularly significant in labour intensive sectors such as clothing, textiles and footwear. It was even more deeply liberalizing in the sense that it prohibited or limited traditional tools of economic policy such as conditional access to resources, two price systems for resources, regulated market access, foreign investment review, “discrimination” by governments and crown corporations, and use of public procurement.
The North American Free Trade Agreement (NAFTA) went beyond the FTA in some respects, by adding Mexico to the FTA region and further liberalizing trade in some services and further limiting regulation of investment.
More significant to the Canadian garment industry than the loss of tariffs have been the provisions of the F.T.A. granting U.S. companies “secure access” and “national treatment” in the Canadian market, with guarantees that they would be treated on the same basis as Canadian companies. “With virtually iron clad assurances - in virtually all manufacturing sectors - that the Canadian market would be available to them even if all production was shifted to the U.S., many U.S. companies clearly decided to significantly rationalize or completely close their Canadian branch plants. The C.L.C. Job Loss Register details the loss of almost 250,000 jobs since the F.T.A. came into effect.”[x]
For the garment industry of the most devastating impacts of the F.T.A. and NAFTA has been the loss of full-time factory jobs. The ILO reports that employment, which was relatively stable until 1989, fell sharply with the impending signature of the NAFTA. Employment levels in Canada went from close to 120,000 workers to about 85,000[xi] and have stayed relatively stable at that level. In Ontario alone there were 25,000 workers in 1998, but by 1991 the number had fallen to 14,328.[xii] Since the late 1980's, the rate of unionized factory closures is almost twice the rate of job loss in the industry, and the unionization rate in the clothing and textile industries dropped from almost 44% to under 20%.[xiii]
Post NAFTA wage levels have dropped as much as 20% and while wage differences in Canada and the US have leveled off, the difference between the two countries and Mexico remains large. Canadian manufacturers moving more production to Mexico has had an impact on the bargaining power of unions, leading to weakening collective agreements.[xiv] The subsequent downward pressure on wages and reduced bargaining power of unions is directly related to NAFTA.
The FTA and NAFTA have also had a considerable impact on the nature of work, both in terms of the growth of part-time work and the intensification of work. The incidence of part-time work has increased 30% among adult women since 1989.
The marked casualization of employment in the 1990's, particularly among women, young people and other disadvantaged groups in the labour market undoubtedly reflects very weak demand for workers and high unemployment combined with major cuts to income support programs. It is driven by employer competitiveness strategies of contracting out and out-sourcing work, and making the hours of work highly variable in order to minimize the fixed costs of permanent, full-time workers who may have access to benefits such as pensions and are frequently unionized. Work has been greatly intensified in most workplaces by delayering and “downsizing, and by the widespread adoption of “lean production” techniques.[xv]
Plant closures and job loss were just the first casualties. This “casualization” of employment has resulted in increasingly precarious employment in the garment industry. When the larger garment factories were closed down work was sent out to “flexible” contract shops which in turn hired immigrant women (often, the same women who had worked in the factories) as homeworkers. This created a newly shaped work force, polarizing the labour force into two distinct groups; the factory workers and a group of workers in increasingly precarious employment. The group of core factory workers who maintained access to traditional collective bargaining faces constant pressure for wage concessions. Surrounding this group are the peripheral “flexible” workers who have few if any benefits, extremely low wages and little or no real protection under employment law.
Despite multiple plant closures and high rates of job loss, production has not dropped significantly in Canada. In 1994, the federal government, committed to deregulation and liberalized trade policies, banded together with manufacturers to come up with a “competitive” strategy. A clear example of this was the Benchmarking Study funded by the federal government. This study was supported by the Canadian Apparel Manufacturer’s Association and was part of the overall Fashion Apparel Sector Strategy supported by the federal government. Within the free trade environment the manufacturers and federal government identified three strategies to stay competitive in a global economy: quick response or just-in-time integrated systems between retailers and manufacturers, new technologies such as information technologies between retailer and manufacturer, and new work processes such as cross-skilling. The federal government argued that the garment industry needed to develop its design and marketing capacity in order to compete internationally. Fashion-design increased a products’ value-added and would thereby allow the industry to improve both its productivity and profitability.
The benchmarking study was to encourage manufacturers to make “visionary leaps” so they could be leaders in the industry internationally. It analyzed 10 apparel categories ranging from men’s suits to socks and women’s dresses, jackets and blazers. It identified which price point the manufacturers aim for and the size of the company. The study emphasized the links a manufacturer should make with retailers, largely set goals in terms of speeding up the cycle time, and that manufacturers needed to examine the non-value added elements of the pre-production processes. For example, in the production of women’s dresses, it called for product development cycles to be reduced to 5-6 weeks from the average time of 26 weeks. The only way to accomplish this really would be through the intensification of work.
In the garment industry, manufacturers argued, “quick response” was the strategy for survival in the global environment. The vision for manufacturing was quite clear - intensify work and reduce wages. A low wage strategy for the Canadian garment industry was reinforced. The results of the study are a clear indication of the approach the federal government has taken to the garment industry. Since the early 1970's the federal government had advocated a policy of phased-in trade liberalization. The underlying assumption was that the industry would modernize to build a “stronger industry”. Despite protests from labour and many manufacturers, the federal government continued to roll back trade protections and enable creative entrepreneurial forces to flow in the open market. The benchmarking study was a very clear articulation of the government’s support of a lean production system in which all non-value added components are to be eliminated from the system and the few remaining workers are to work harder for less wages.
The Structure of the Industry: A “Virtual” Pyramid Changes in the structure of apparel production and of retailing have been striking over the last generation. Industrial restructuring and more open markets have given retailers and brand-based companies, who manage a global network of suppliers, increasing control of the garment industry.
As a result of increasing trade liberalization, corporations...that were once vertically integrated and identified with the main corporate owner are now outsourcing or contracting out different parts of work into a pyramid of fragmented independent contractors to create a “lean”, “hollow” and “virtual” corporation - most often called the Benetton model. Key features include: 1.) The dominant multi-national expects to work “collaboratively” with their suppliers on a very flexible, just-in-time basis. 2) They maintain a small group of “core” workers while the rest of the workforce is peripheral or flexible. 3. Corporate owners claim that virtual corporations are “consumer driven” and the way to meet their needs is by reshaping work and workplaces.[xvi]
The garment industry is organized in the form of a “virtual” or hollow pyramid of large retailers and super labels, jobbers and manufacturers, small contracting shops, and homeworkers.[xvii]
Once dominated by large manufacturers who sold their products to retailers, at the top of the production pyramid are the major retailers and brand name labels. In Canada, garment retail is dominated by a very few large corporations. The Bay, with a profit of $52 million, Zellers and Sears Canada had about 60% of the combined retail market share in 1998.
In addition, U.S.-based retailers and brand name labels are gaining control of an increasing share of the Canadian market.[xviii] Wal-Mart, which entered the Canadian retail market in1994, is now Canada’s second largest department store, is the largest retail company in the world with more than 3,400 stores world-wide and reported sales of US$118 billion in 1997.[xix] Wal-Mart had almost 30% of the Canadian retail market share by 1998. A very small number of manufacturers, controlling “super labels, such as NIKE or Alfred Sung, function in much the same way as retailers.
The increasingly concentrated retail market has changed the structure of the apparel industry, and retailers exert enormous control over the production process from marketing, design, and distribution and access to the consumer market. It is as a result of the new quick response or just-in-time strategy that retailers control when a garment gets made, the price it gets made for and the quantity of garments made. These few powerful retailers dictate the price and turn-around time for the manufacture of their garments, putting apparel contractors under constant pressure to lower labour costs. To meet deadlines, they impose strict production quotas and demand excessively long hours of work. When workers organize for decent working conditions and wages, retailers have the power to threaten to shift production to other factories or countries.
Under the retailers, on the production pyramid, are the manufacturers. Most often manufacturers do not produce clothes in a factory that they own; their role is more like “jobbers”, coordinating specialized aspects of the garment production. Manufacturers order fabric, coordinate design in a computer assisted design (CAD) facility, and then may also use a high tech cutting room. The garment parts are then sent out to sewing contractors. Many retailers now bypass the traditional manufacturer, ordering their own “private label” goods directly from contracting shops around the world.
While corporate concentration and control has increased at the top of the pyramid, the contracting and sub-contracting level of production is fragmented into very small, often family-owned shops. Contracting shops employ a small core group of sewers.[xx] This tier in the hollow pyramid is extremely competitive with contractors only able to compete on price and turnaround time. Subcontracting frequently occurs at a number of different stages in the production chain, as firms farm work out to smaller and smaller companies. At the bottom of the pyramid are the often unregulated and semi-legal subcontracting operations in sweatshops and in the homes of homeworkers.
The structure of the garment industry, following the chain of production, and determining whose hands the garment has passed through, is extremely complex. Retailers at the top of the production pyramid admit that they often have no idea where their clothes are actually manufactured. What is clear is the way in which these giant global corporations are gaining power and profits, supported by governments “deregulating” to compete for investment everywhere.
The “Flexible” Worker: Labour Force Characteristics Tens of thousands of women arriving in Canada over the last century found their first job in the immigrant job-ghetto of Canada’s garment manufacturing industry. The garment industry is often the first and only source of employment for many women. Women workers represent more than 75% of the labour force in the apparel industry compared to 25% in other manufacturing industries. About 50% of the formal labour force are immigrants.
Borowy argues that a significant reason for the federal government’s lack of support to the faltering garment industry in Canada was that:
The garment industry is dominated by women and by immigrants and workers of colour. Most often, women’s and immigrants’ work is thought of as secondary and not as important as “real” manufacturing jobs, like building cars. Women’s work is considered to be unskilled- even though the worker is required to coordinate a very soft and pliable material through a machine 300-600 times a day.[xxi]
The sexual division of labour has always been clearly marked in the garment industry. Women sew the parts of the garment together and the higher paying cutting jobs[xxii] (marking and cutting the fabric) have traditionally been filled by men. Women are also located in more “highly sensitive” sub-sectors of the garment industry (women and children’s clothing production), more vulnerable to the effects of trade liberalization policies.[xxiii] Women’s clothing jobs, have been hard hit in comparison to men’s clothing. Almost twice as many jobs have been lost in women’s clothing compared to men’s.
A lower proportion of women than men are unionized and women are therefore particularly dependent on minimum wage laws, employment standards, health and safety regulations, and other legislation establishing minimum working conditions.
The restructuring in the garment industry is building upon a historically-based sexual division of labour. The expansion of a downgraded manufacturing sector can be seen to generate a demand for low-wage women workers. Canadian garment manufacturers have responded to global competition by minimizing their costs through a low wage strategy in which homeworkers and workers in small contract shops are used as the most “flexible” or “just-in-time” workers. To gain the competitive edge, manufacturers require “flexible” workers, “flexible” wages, and “flexible” working conditions. Immigrant women have clearly emerged as the labour supply for these kinds of jobs.
In interviews carried out with homeworkers in Toronto, all but a few reported that they became homeworkers as their only option because they could not find affordable childcare. Most started to work at home during their pregnancy. Contractors tell women workers they can stay at home, take care of their children and work...that the “flexibility” of the work is to their advantage. Women’s subordination and attachment to domestic labour is used to force an even greater erosion of wages and working conditions.
The High Road and the Low Road The clothing industry[xxiv] in Canada is extremely fragmented. It is also diverse, with 21 distinct sub-sectors and products that range from $1,500 suits to $5.00 t-shirts. Based on the standard industrial classification used by Statistics Canada, the Canadian clothing industry is divided into four sub-sectors (men and boy’s clothing, women’s clothing, children’s clothing, and other clothing and apparel). It is important to note that workplaces vary greatly and manufacturers’ responses to globalization differ considerably.[xxv]
In general, however, the Canadian government gave Canadian garment manufacturers very little choice. To survive in an overly competitive Canadian market, cultivated by trade liberalization, the government would provide assistance only to those companies that adopted their export oriented strategy.
The “high road”, focusing on production for export and increased capital investment, has been followed by some manufacturers in the men’s clothing industry. The industry’s introduction of new technologies, however. is quite uneven. Most of garment manufacturing remains labour intensive in an industry composed largely of family run businesses who have spent little time considering technological change. In most cases, clothing manufacturers have adopted what has been called the “low road” (or “cost-cutting) competitive strategy to respond to the demands of retailers. Both roads appear to lead to the same place, putting particular sectors of the clothing industry, and certain workers, at higher risk.
The High Road Some Canadian apparel companies, particularly those in the men’s clothing sector, feel that NAFTA gave them an edge over U.S. competitors and, in fact, clothing exports to the U.S snowballed from C$67.9 million in 1991 to C$276 million in 1996. [xxvi] Some Canadian manufacturers have been successful in adapting to the transforming industry by developing their capacity to produce exports for the U.S. market.[xxvii] Samuelson, of Samuelson Ltd. stated that “As a result of the Free Trade Agreement with the U.S., we were virtually mandated by the Canadian government to increase our export penetration”.[xxviii] Two key factors have contributed to their “success”. Some Canadian companies invested in state-of-the-art technology, to turn out a better product, faster and for less, which gave them the edge over their American counterparts. The other, arguably most important advantage for these Canadian manufacturers has been the weak Canadian dollar which lops about a third off the selling price of comparable U.S.-made products.
Not all manufacturers have “adapted” in the same way to the impact of increasingly globalized markets. Levi Strauss and Company is the largest brand-name apparel manufacturer in the world. The California-based company designs, manufactures and markets branded jeans, dress pants and sportswear for men, women and children. Levi’s has often been held up as an ideal employer in Canada. In a volatile and complex industry, facing unprecedented global competition, Levi Strauss’s survival was touted as the way to go. Invest in new technologies, increase your export capacity, have a skilled workforce and you can compete in the global market.
All of Levi’s production in Canada [xxix] takes place in unionized shops, where workers have bargained for and won above industry standard wages and good benefits. Conditions in the plants exceed all health and safety standards. Substantial investment has been made in modernizing the plants. In addition, Levi Strauss was one of the first garment manufacturers, in fact one of the first multi-national corporations, to adopt a code of conduct[xxx] articulating standards and monitoring mechanisms in the workplace.
Last year at this time, Levi’s had 4 Canadian factories employing over 2,000 workers. Three in Ontario are sewing plants in Cornwall and Stoney Creek, and a finishing plant in Brantford, and there is one sewing plant in Edmonton. From the Canadian workers’ perspective, in an industry consisting primarily of small, non-union factories with fewer than twenty workers, these are very “good” jobs.
In 1997 Levi’s closed 11 U.S. factories. Then in February, 1999 Levi’s announced they would close 11 of their 34 North American plants, costing 5,900 more workers their jobs. In Cornwall, Ontario the plant closure cost 500 workers their jobs and Levi’s cut a further 100 jobs at the finishing plant in Brantford.
Those “good” jobs are gone, victims of globalization. The company presently contracts out manufacturing in 60 countries and says it will accelerate that trend with the recent plant closures. John Ermatinger, President of Levi’s America’s Division, states: “It is clear to us that assembly jobs are moving offshore. Our competitors have very little onshore capacity and have moved to areas such as Latin America and Asia. Shifting a significant portion of our manufacturing for the U.S. and Canadian markets to contractors throughout the world will give the company greater flexibility to allocate resources and capital to its brands”.
The Levi’s example of plant closures, layoffs and moving to offshore production is not unique. The precariousness of the “high road” is acute and “good” Canadian jobs rapidly transform into low wage, non-union, and sub-standard jobs in the developing world.
The Low Road: Homeworkers in Toronto, Ontario The greatest impact “just-in-time” production has had has been strengthening and reinforcing the hierarchical chain of production, discussed earlier, with retailers at the top and manufacturers below competing against one another for work. As a result, a low wage strategy dominates the industry. Workers are forced to absorb the greater production costs and the results for workers include low wages, the violation of employment standards, little worker control, sub-standard health and safety conditions, and decreasing unionization rates. Non-standard work, specifically homework and also sub-standard small shops, are used as the primary tactic to cut labour costs in production. Homeworking is a key ingredient of this low-wage strategy.
Homework has emerged as a key component of the global economy in which subcontracting plays a growing role in decentralizing production. According to a report on Homeworking prepared by the ILO for the 1995 Conference, “...if technological development in the industry permits such decentralization of the production process, the incidence of subcontracting is likely to be high. In a recent survey of over 3000 manufacturing firms in Malaysia, over a third of all electronics, textile and garment firms were seen to have subcontracted out part of the production work. Interestingly, the larger the firm size, the higher was the incidence of such sub-contracting.”
In Canada, the former ILGWU, noted similar patterns in their industry through the seventies, eighties and nineties. With factory closures and organized workers losing their jobs, some of the production moved to developing countries where labour was cheaper. At the same time there was a substantial increase in the use of subcontracting to smaller companies and manufacturers, who in turn then employed homeworkers.
Nearly one-third of Canada’s $6.8 billion garment industry is located in Ontario. Throughout the late 1980's and the 1990's, the provincial government generally accepted the position of the federal government to support phased-in trade liberalization.[xxxi] In the City of Toronto[xxxii], five out of every ten garment workers lost their jobs between 1988 and 1995.
Most Toronto garment workers no longer work full-time in large factories, but rather work in a network of small contracting shops or as home-based workers. Toronto still has a sizeable garment industry, where 600-700 clothing manufacturers employ at least 15,000 workers and an estimated 8,000 to 10,000 homeworkers[xxxiii], within the sub-sectors of women’s and children’s clothing. Although there has been a tremendous shift to home work in the garment industry, homeworkers do not show up on statistics. “By and large, one can say homeworkers who sew garments at home are part of the informal economy, in that they are invisible in official employment statistics...it is very difficult to get hard facts and figures about them.”[xxxiv]
Three studies on the conditions of homeworkers in Toronto’s garment sector, reporting relatively similar findings, have been conducted by the ILGWU/UNITE. In terms of wages, most workers make around the minimum wage[xxxv] with an average hourly rate of $6-8.00. Some homeworkers are being paid well below the legal minimum wage: a sewer with 20 years experience was sewing in pockets for $2.00 an hour. She had not had a wage increase in 15 years. The wages of sewing machine operators have not risen in 15 years.[xxxvi]
I estimate that I made between $4 to $5.00 an hour, depending on the job. We were always under pressure to produce more and were told if we didn’t get the pieces done we wouldn’t get any more work. Many times I sewed ‘til 2 or 3 am to finish pieces. I received no overtime pay. I was paid the straight piece rate per item.
Homeworker, Toronto The most adverse trend was the practice of employers to reduce the piece rate once the homeworker became more skilled at what they were sewing. As the workers skills increase, their wages decline. Additional financial burdens for homeworkers are paying for their own equipment, (many are told that they are required to purchase two industrial sewing machines, which cost up to $2,800.), and covering business costs such a electricity and heating.
Homeworkers have little or no control over their work schedules and report that they must adapt their work to the demands of their employer. Homeworkers work extremely long hours and receive no overtime pay. They experience high levels of insecurity of employment, with periods of intensive labour, and other periods of up to three months with no work. On average homeworkers report working 46 hours a week, and between 61-75 hours a week at their busiest times. Homeworkers stated that their children and other family members often must help them with their work in order to meet the contractor’s schedule.
Due to the invisibility of production in the workers’ home, homeworking is extremely difficult to regulate. Employers of homeworkers consistently fail to make contributions to EI or CPP or to provide the legally required benefits such as statutory holidays and vacation pay.
A number of health and safety issues were raised by homeworkers experiencing repetitive strain injury, back and shoulder pain, serious allergies and the physical and psychological stresses of balancing work and family responsibilities. Other stresses experienced by homeworkers is the constant fear of job loss and the isolation of working in the home workplace with few contacts with other homeworkers or worker resources.[xxxvii] When employers shift work from a contracting shop into a home, they also shift their responsibility to protect workers’ health and safety onto the backs of individual homeworkers. Homeworkers are exempt from the Workplace Safety and Insurance act which means that they can not claim compensation from government in work-related injuries.
Employment standards legislation falls under provincial jurisdiction. While the Employment Standards Act recognizes that some if not all homeworkers are employees, it excludes them from maximum hours of work, overtime rates and statutory holiday provisions. This contradiction indicates the ambivalent attitude of legislators to the employment status of homeworkers.
Ontario’s Conservative government has systematically dismantled protections for workers.[xxxviii] In 1998, one third of employment standards officers responsible for the enforcement of labour legislation were let go and the Ministry of Labour’s budget was cut in half. Resources for on-site inspections have been further reduced. Although it is impossible to quantify the number of homeworkers and sub-standard sub-contracting shops (sweatshops) operating in Ontario, because so many small companies operate underground, we do know that inadequate monitoring of these operations is carried out by too few inspectors.
Under the Employment Standards Act an employer is obligated to obtain a permit, issued by the Director of Employment Standards. The permit contains very specific terms and conditions which, on paper, provide generous protection to homeworkers. In practice, most employers who use homeworkers in Ontario simply do not obtain a permit. As the penalties for violating this requirement are virtually never imposed, there is no incentive for employers to obtain permits. Thus, homework is transformed into a clandestine activity with little protection for homeworkers.
Complaints can not be anonymous. A homeworker making a formal complaint is required to reveal their identity to the Ministry. Homeworkers and workers in small contracting shops are extremely reluctant to complain. Workers are justifiably afraid that if they make a claim against their employer they will lose their jobs.[xxxix] If a worker complains, the subcontractor simply stops giving them work. In such precarious employment, workers choose to keep their jobs rather than complain about no overtime pay or sub-minimum wages.
A new buzzword of the Ministry of Labour is the concept of “self-reliance”, implying that it is the responsibility of employers and employees to jointly ensure compliance with employment legislation. This is a further step of the government to abdicate responsibility for the enforcement of the laws they make. Minimum standards need to be in place and rigorously enforced to regulate the behavior of unscrupulous employers. Employment standards set the floor for everyone else working in Ontario. If the basic floor of standards is taken away, all workers can fall through.[xl]
The garment manufacturer’s increased use of small contractors and homeworkers, who are often paid less than the minimum wage, combined with the lack of enforcement of existing labour standards, is the most glaring example of the low wage “competitiveness agenda” in the garment industry. Canadian garment manufacturers have responded to globalization and the Canadian government’s competitiveness agenda by minimizing their costs through a low wage strategy in which homeworkers are used as the most “flexible” or “just-in-time” workers.
Canadian Government Policy Public policy is not neutral. The federal government has clearly supported the interests of transnational capital through the promotion of trade liberalization and de-regulation internationally and by reducing its’ regulatory powers domestically. They have embraced a policy framework that has abandoned garment workers in a low wage industry. Subsequent policy decisions, on the domestic front, have been particularly significant for workers in the garment sector.
Governments at all levels have embarked upon an exercise of downward restructuring. This restructuring has been accomplished through strategies such as privatization, devolution and deficit reduction. Unemployment insurance, health, education and childcare programs have all been radically changed and a clear pattern has emerged. In order to maintain Canada’s competitive position, expenditures in social programs have been driven down, making low wage jobs the only alternative for workers facing ever diminishing choices.
Social Programs: The deliberate refashioning of Canada’s social programs, creating a fundamental restructuring of the welfare system, is one example of the federal government’s commitment to the competitive agenda. With the introduction of the CHST, education, health and social programs were shifted from cost sharing, based on entitlement, to a per capita payment to the provinces. Paul Martin’s 1995 budget, then cut transfer payments to the provinces. In Ontario, the cuts to transfer payments were used as a partial justification for the Ontario government’s cut of 21.6% of welfare payments. Garment workers, as precarious workers fall through the holes in the “social safety net”.
Childcare: In interviews carried out with homeworkers in Toronto, all but a few reported that they became homeworkers as their only option because they could not find affordable childcare. Most started to work at home during their pregnancy. The Liberals’ election promise to develop a national childcare system was not delivered. Instead, with the introduction of the Canada Health and Social Transfer (CHST) The Federal government has abandoned the child care agenda through devolving responsibility to the provinces to “prioritize” their own provinces needs. The response of the Ontario government was to cut subsidized childcare spaces.
Training: Begun in 1996, the off loading or devolution of most of the federal government’s labour market programming to the provinces is almost complete. These changes have particularly affected workers in sectors that are restructuring and where workers have lost their jobs because of plant closures. Government programs and services formerly delivered through Human Resource Development Canada (H.R.D.C) are now a bewildering patch work of programs delivered through a variety of provincial and private sector providers. The program and delivery mix depends on the negotiated terms of the federal-provincial Labour Market Development Agreement (L.M.D.A). In Ontario[xli] no agreement has been developed to date and most programming is in limbo or very hard to access.
Labour market programs have one thing in common. The onus is placed upon the individual worker. The process to get assistance is not unlike applying for a small business loan. A laid off worker seeking support for language training, upgrading or other skill training must now undergo a lengthy, rigorous process in order to get a loan or grant to purchase an appropriate course and receive training.
Adjustment: During the FTA debate, the garment industry was seen as a “sun-set”, high risk industry. As such, government developed few program supports for the adjustment needs of workers faced with plant closures. Prior to devolution, when there was a major layoff or plant closure, workers accessed a cost shared program. The costs were divided between the federal government, the province and the employer. The program was intended to bridge the gap in the event of major closures or in instances where there was no union or negotiated plant closure agreements. The funds from the adjustment program would be used to set up adjustment committees that helped with E.I. applications, job search and access to appropriate agencies or training institutions.
Under the new LMDA’s some provinces provide limited adjustment programming (funded by the employer and the province). Other provinces expect individuals to apply for loans or grants as there is no systemic support in major lay off situations. As there is no negotiated LMDA agreement in Ontario, government support for adjustment at either level of government is uneven at best, leaving workers in the apparel and textile sectors even more vulnerable.
The federal government currently supports a Sectoral Council in the Apparel sector. Theoretically, these bi-partite structures work to “strengthen” the sector by supporting public/ private sector partnerships. In practice, it appears to be a less than equal partnership. Sector councils are geared only towards employed workers in unionized workplaces. Much of their work to date has been dedicated to supporting the Canadian industry’s competitive positioning within the global economy.
Unemployment Insurance: U.I. was one of the few federal labour market programs excluded from off-loading to the provinces. It was not exempt from cuts in 1990 and 1993 and subsequent regulatory changes. Renamed “Employment Insurance”, the cumulative effect of these changes has been anything but an “Employment Insurance” for workers. According to H.R.D.C., prior to the passage of Bill C21 in 1990, 87% of all unemployed workers were in receipt of U.I. By 1999, that percentage had dwindled to less than 40%. Cuts to benefit levels, combined with more stringent eligibility requirements, has limited workers entitlement to U.I. Penalties have also been increased for those who quit their jobs or were fired.
None of the UI changes reflect labour market changes that particularly affect women workers in the garment industry such as the growth in part-time work and temporary employment. Garment workers have been particularly affected by the “Intensity rule” of this new system, which lowers the benefit rates for repeat claimants. Being let go during low production periods is a common occurrence for workers in sub-contracting shops. In this leaner system, the more that E.I. is needed, the less is paid out.
Finally, in 1997, Employment Insurance Revenues exceeded expenditures by $8.6 billion in 1998. It is expected that the cumulative E.I. surplus will be well in excess of $22 billion and growing, despite a 1999 premium break to employers.
Conclusion: The federal government has made clear choices about the role of Canada’s garment industry in the globalized economy. The results of these choices feature plant closures and job loss, capital flight, work intensification in factories, low waged homework , and a deregulated labour market. Government policies have served to reinforce the “vision” of manufacturers adopting a low wage strategy and the restructuring of homework.
Garment workers face lower wages, an erosion in working conditions, including more overtime, work intensification, and the transfer of business costs to the worker. There is an increase in worker isolation. For women workers, their double day of paid work plus domestic chores is becoming an endless day of work for pay, child care, and other family responsibilities.
Civil society has responded to this attack in a variety of ways.
A key issue for UNITE, the Union of Needletrades, Industrial and Textile Workers, (formerly the ILGWU and the Amalgamated Textile Workers Union), was that union membership was falling at an even faster rate than the industry closures. In addition, increased homework was pitting full-time protected workers against the more precariously employed workers in a downward push on all workers’ wages and working conditions. UNITE has engaged in a number of corporate and public education campaigns and coalition building efforts. The Coalition for Fair Wages and Working Conditions for Homeworkers, forged an alliance between unions, social movements and community groups. Formed in 1991 the Coalition adopted a three pronged campaign strategy on law reform: to seek changes to the Employment Standards Act aimed at ensuring equitable treatment of homeworkers, to advocate effective enforcement of the Act, and to develop and seek implementation of broader-based bargaining mechanisms under the Ontario Labour Relations Act which would allow homeworkers to organize and act collectively in their own interests. The Coalition learned that new labour strategies (such as community unionism) and union demands (in which workers and their trade unions insert themselves into the work reorganization process and demand a say in its design and implementation) are key if the union movement is to fight the low wage strategy effectively.
The Labour Behind the Label Coalition, a coalition of NGO’s, community groups and unions, has engaged in campaigns to pressure the Canadian government to address off-shore sweatshop abuses and to improve standards and working conditions of homeworkers and contract shop workers in Canada. They also led a campaign calling for a Federal Taskforce on Sweatshop Abuses.
Students Against Sweatshops (SAS) groups are springing up on campuses across the country. The University of Toronto SAS was the first Canadian campus to successfully negotiate a code of conduct for university-licensed apparel.
The CAW, the Steelworkers and organizations like the Maquila Solidarity Network and Development and Peace (to name just a few) have developed international partnerships with NGO’s and worker organizations engaging in international solidarity and consumer campaigns.
All of the above campaigns (and others across the country) have called for one or more of the following strategies:
A national, worker centered, sectoral strategy;
Provincial enforcement of existing employment standards legislation in subcontracting shops and for homeworkers;
A central registry for homeworkers;
Joint and several liability to make retailers and manufacturers liable for the labour rights violations of their contractors;
A national child care program;
New forms of broader based bargaining to establish industry wide standards that are negotiated with workers and enforced. These new forms of collective bargaining, such as sectoral bargaining, need to be supported (not torn apart, as in the case of Quebec’s Decree[xlii] system) to ensure that immigrant women, as vulnerable workers, have real access to unionization;
Government support for an international regulatory framework that supports workers’ rights, human rights, fair and managed trade;
Trade agreements that protect labour and environmental standards, with mechanisms for requiring employers to abide by legislation and a set of fundamental labour principles.
Government role in ensuring corporate compliance both legislatively and through promotion of corporate responsibility.
Be they consumer campaigns, legal strategies, or organizing strategies it is clear that there is no single response that will reverse the volatile convergence of deregulation, downward wage pressure and competitive trade policies. A multi-level and complex response led by garment workers and supported by activists and other citizens can challenge corporate interests and reshape the way in which globalization affects garment workers.
[i] Policy Options to Improve Standards for Garment Workers in Canada and Internationally, MSN, page 12.
[ii] “Globalization of the Footwear, Textiles and Clothing Industries”, ILO Report, Geneva, 1996, page 6.
[iii] “Fashion Victims: Together We Can Clean Up the Clothes Trade”, BAFOD, November 1998, page 9.
[iv] “Export processing zones” in Asia and “free trade zones” in Latin America and the Caribbean are locations where foreign companies import duty-free component parts for assembly and re-export finished products, again duty-free. The conditions in these factories vary, some appearing clean, organized and well lit; however, they all provide the worker with extremely low wages, long hours of work, and excessive quotas for production.
[v] Wendy was brought to the U.S. and Canada on a speaking tour hosted by the National Labour Committee, a New York based non-profit human rights and workers’ rights organization focused on workers assembling garments for the U.S. market in Central America and the Caribbean.
[vi] “Trade Liberalization and the Rights of Women Workers,, Carmen Valadez, Mexico City, 1997.
[vii] Developing countries have a comparative advantage in the clothing and textile sector due to the labour intensive and low waged nature of the industry. In 1992, textiles and clothing accounted for approximately 26 percent of developing countries’ total exports, and in 1996 the developing countries’ share in world textile exports totaled 59 percent, and clothing exports 73 percent. Cai, 1997.
[viii] Angela Hale, “Phasing Out the Multi-Fibre Arrangement”.
[ix] The International Textile, Garment and Leather Workers’ Federation (ITGLWF) is a world-wide federation of free trade unions in the fields of textiles, garment and leather industries. The ITGLWF belongs to an organization of International Trade Secretariats whose aim is the world-wide protection and enforcement of trade union rights and acts of solidarity within the trade union movement.
[x] See “The Crisis of Canadian Manufacturing”, a report from the Canadian Labour Congress.
[xi] A similar pattern has emerged in the textile industry...about 15,000 jobs, over 25% of jobs were lost following free trade. Production, again, has not dropped. In the case of the textile industry, however, production has not shifted to an unregulated sector like homework.
[xii] Statistics Canada, Employment, Earnings and Hours, Cat. 72-002, 1992.
[xiii] Industry Canada, Sector Competitiveness Framework Series, Apparel.
[xiv] Leah Vosko, “The Last Thread: An Analysis of the Apparel Goods Provisions in the North American Free Trade Agreement”, Canadian Centre for Policy Alternatives, Ottawa, 1993.
[xv] Andrew Jackson, “Impacts of the FTA and NAFTA on Canadian Labour Markets and Lbour and Social Standards”, Canadian Labour Congress, Ottawa.
[xvi] From “Designing the Future for Garment Workers”, ILGWU, 1995.
[xvii] Thanks are due primarily to Jan Borowy for sharing her work and analysis of the “virtual” corporation and work reorganization of the garment industry. Her work with the former ILGWU on TARP projects and with the Homeworkers’ Association more thoroughly explores this.
[xviii] A 1996 study by Wendy Evans, “Retail Border Wars: Winning the International Retail Race”, examines the increasing American penetration into the Canadian retail market through both American market domination of brand name labels and investment in retail outlets. She shows that there were 54 American retailers in Canada in 1996, five times the 10 in 1985. Most retailers interviewed estimated their presence in Canada would increase 50-100% over the next 5-6 years.
[xix] Policy Options to Improve Standards..., MSN, page 9.
[xx] Over 76% of Ontario’s garment industry is made up of shops with fewer than 20 workers.
[xxi] Jan Borowy in “Designing the Future for Garment Workers”, TARP, ILGWU, 1995, p. 7.
[xxii] Male cutters, the highest wage earners are now being threatened with being replaced by new computerized technology.
[xxiii] Ontario Ministry of Industry, Trade and Technology, Assessment of Direct Employment Effects of Freer Trade for Ontario’s Manufacturing Industries, Toronto, 1985.
[xxiv] It should be clarified that the Canadian clothing and the Canadian textile industries are quite distinct industries. The clothing industry is highly labour intensive, while the textile industry (which has had a very different experience with globalization and liberalized trade) increasingly relies on massive investment in technology. This paper does not address issues relating to the Canadian textile industry.
[xxv] The sector that is doing best (men’s suits, tailored garments) is the most highly unionized.
[xxvi] Figures from researcher Kormos, Harris and Associates, Toledo, Ohio.
[xxvii] For example, Peerless International, the biggest unit volume suit exporter to the U.S., went from US$20 million to an estimated US$274 million in six years.
[xxviii] Quoted in DNR, July 30, 1997 issue.
[xxix] In 1993 Levi Strauss operated 700 plants in 60 countries. Annual sales are worth $7 billion. Multinational Monitor, March 1997 reported that between 1984 and 1997 the company’s market value increased 105 times - almost as much as Microsoft. Levi’s market share of the US jeans market has fallen sharply, from 48% in 1990 to 26% in 1997.
[xxx] The “Global Sourcing and Operating Guidelines” was released by Levi Strauss in 1992. It has been criticized for its failure to meet or reference ILO standards, particularly regarding freedom of association. Its’ company-controlled verification system raises serious doubts about effective monitoring and verification and there is no guarantee for a living wage.
[xxxi] Although a study on the state of the Ontario garment industry was released in 1989, by the then NDP government of the day, it did not put forward specific recommendations for action.
[xxxii] Garment is the largest manufacturing employer in Toronto and 90% of production workers are women.
[xxxiii] It is estimated that there are at least 30,000 homeworkers in Quebec. The demographics of homeworking in Quebec differ dramatically from those in Ontario. In Quebec the majority of homeworkers are native francophones living in rural communities. In Ontario the vast majority are immigrants to Canada who do not speak either English or French and who work in the Greater Toronto Area.
[xxxiv] Roxanna Ng, author of the most recent report on the conditions of homeworkers in Toronto’s garment industry, “Homeworking: Home Office or Home Sweatshop?”
[xxxv] The Ontario Employment Standards Act puts the minimum wage for homeworkers at $7.54 per hour. That includes the minimum wage of $6.85/hour and the ten percent premium stipulated in the act to cover overhead costs.
[xxxvi] Roxanna Ng (see note 29) reports that the piece rate for skirts is$2.00, a shirt is around $3.00 and a dress pays $4-5.00. Some of these garments retail for up to $200.00
[xxxvii] Organizing homeworkers requires flexible and creative ways of reaching out to workers in the domestic workplace and of winning public support. UNITE, formerly the ILGWU, initially focused on work with Toronto’s Chinese and Vietnamese communities. Outreach work and research were done by Chinese and Vietnamese workers employed by the union. At another level a public awareness campaign was waged to expose and highlight the issues of homeworkers. This campaign focused specifically on the big retailers whose suppliers include small manufacturers employing homeworkers. This work led to the establishment of the Homeworkers’ Association.
[xxxviii]32. For example, Bill 49 in which unionized workers can no longer file a complaint under employment standards and Bill 7 which attacks collective bargaining making it harder to join a union.
[xxxix] 90% of employees who do make claims under the ESA are no longer employed by the employer alleged to have violated their rights.
[xl] The Future of Work in Ontario: Discussion Paper, O.F.L.
[xli] In Newfoundland, the federal government is still responsible for administration and has co-located offices with provincial agencies. Alberta receives transfer payments for training, employment centres and has developed its own policies and (increasingly privatized) programs. The province operates with minimal accountability to the federal government for the monies received.
[xlii] The decree system in Quebec is a form of broader based bargaining that ensures that key labour standards, negotiated by the union and employer associations are extended to everyone in the industry. Although garment workers earn less than in other industries, they have been protected by labour standards, have enjoyed decent benefits and an average wage of $9.50 per hour. In May 1999, the Quebec government introduced Bill 47 which sets out to abolish the four decrees in the garment industry. Abolishing the decrees is a direct attack on the full integration of immigrants and women in Quebec’s workplace...and supports a low wage strategy in the garment industry.
Borowy, J., Gordon, S., Lebans, “Are these Clothes Clean: The Campaign for Fair Wages and Working Conditions of Homeworkers”, in Carty, A., And Still We Rise, Women’s Press, Toronto, 1993.
Cai, Wenguo, “International Trade in Textiles and Clothing after the Uruguay Round: Opportunities and Challenges for ESCWA Countries”, International Papers in International Trade Law and Policy, No. 46, Centre for Trade Policy and Law, Ottawa, 1997.
Canada. Consumer Products Industry Branch, Industry Canada, “Human Reource Needs Analysis of the Canadian Apparel Industry. (http://strategis.ic.gc/ssg/a