Productivity and workers rights

A booklet for workers in the global garment industry

This booklet is for workers, trade unions and other labour organisations that have day-to-day contact with garment workers. Garment factories often make changes to the way their employees work in order to save money and increase the amount of clothes they produce. These are called productivity schemes.

Sometimes productivity schemes can be good for workers, as the money saved can be spent on better pay and conditions. But, all too often, the changes are harmful for workers. People are laid off and lose their jobs, or have to work harder and longer hours.

This booklet explains what these changes are, and what the dangers are for workers. It includes discussion points that can be used in workers education. It suggests questions that workers and their union representatives can ask managers when productivity schemes are introduced into the factory.

ActionAid Productivity and workers rights

The drive to increase productivity

Often your employer has little choice but to accept the buyer companys terms, or the order will go to a factory that will accept the lower price.
Garment workers in factories across the world make clothes that will be sold by companies in countries very far away. The companies who sell the garments place their orders with factories like yours to produce their clothes. And they have a lot of power in their dealings with your employer. Every time a buyer company places an order with your employer, it strikes a deal over the price, delivery date and payment terms. These deals can have an enormous impact on whether or not your employer pays you a decent wage or asks for reasonable hours of work. They can affect how the production line runs, and the way that you are treated by your supervisors.

Discussion point
What is it like, working on your line? A  re you paid a bonus for reaching a production target? O  r are you expected to stay behind to complete the quota set by your employer, without any extra pay for overtime? I f so, why do you think your employer is doing this?

The buyer companies generally want to lower their costs. This means that sometimes they reduce the price they pay to your employer for the garments you make. Often your employer has little choice but to accept the buyer companys terms, or the order will go to a factory that will accept the lower price. Your employers often try and cope with this by reducing their costs wherever they can. They want to produce more clothes for less money. This is what productivity is all about. If you find that changes are happening in your factory such as re-organisation of the shop floor, new machines being installed or new work processes being brought in they are probably being done to improve productivity.

ActionAid Productivity and workers rights

The drive to increase productivity continued

LEAN is intended to change the culture of a factory as well as the physical way that the factory and workstations are organised.

Discussion point
Productivity Output
what your factory makes in value

Do any of these things happen at your place of work?

Inputs
what it costs your factory in labour, machines, rent, etc

D  o managers time workers with a stopwatch? A  re workers constantly being changed around on the line? H  ave any changes been made to your workstation, such as to the seat, bench or machine? A  re there fewer bundles waiting to be worked on by your assembly line? A  re you constantly being urged to produce more? H  as your production target been increased? If so, how many times in the last year?  Is what you make measured on an hourly or weekly basis?  Have you noticed any other changes to the work process at your factory?

Some changes may be very big, changing the whole way that the factory is operating, from top to bottom. They may even affect the way that managers communicate with workers, by bringing in new systems for handling disputes.

What is LEAN?
LEAN is perhaps the most radical way of improving productivity. It is based on a system developed by the car manufacturer Toyota. LEAN focuses on continuously improving the way a factory works, to make it ever more efficient. Under LEAN, workers may be organised into cells. These are groups of workers trained in several skills who can make a whole product. Cells have production targets for the whole group rather than for individuals. This is different from the product being made on an assembly line, where workers with different skills each do a particular task. LEAN is intended to change the culture of a factory as well as the physical way that the factory and workstations are organised.

ActionAid Productivity and workers rights

Who wants higher productivity?

If you are experiencing these kinds of changes in your workplace, your employer may be making them for his or her own reasons. Perhaps they think that the current ways of working are too slow, and lead to excessive overtime in your factory. These changes may also be asked for by the buyer companies that place orders in your factory. In some cases, the buyers might be concerned about quality perhaps they are having to return too many faulty garments to your factory. Some may be concerned about your factory failing to meet delivery dates. All these things can affect the buyer companys profits. Recently, some buyer companies have been trying to make sure workers get a higher wage. They claim that the best way to get higher wages is to make changes in the workplace to increase productivity.

The companies argument goes like this: if you can produce more clothes in less time, the factory can earn more money, and therefore it can pay you more. This all sounds reasonable doesnt it? But there are dangers in this for the workers.

ActionAid Productivity and workers rights

The risks for workers

If workers dont come together and get involved when management brings in major changes at your workplace to increase productivity, you could end up:  with job losses, leading to a smaller workforce with a faster pace of work w  ith extra pay, but not in line with how much extra you are actually producing working in an unsafe environment. So lets pause and think about this for a moment, as workers...

ActionAid Productivity and workers rights

Calculating labour productivity

Buyer companies and employers can also use SAMs to calculate how much it costs them to pay wages and benefits for each minute worked.
One of the arguments that buyers use in their negotiations with your factory management is that the labour productivity or line efficiency in your factory is too low. What do they mean by this? In your factory, the workplace changes you identified earlier (see page 2) are usually carried out by industrial engineers the so-called IE department. It is their job to maximise the number of garments produced in the time available. You will probably have seen a board hanging up at the end of your assembly line, monitoring your output against a target, usually on a daily and hourly basis. One of the tasks done by the IE department is to calculate the time taken to make a specific garment. This is usually called a SAM (Standard Allowed Minute), although some factories call this the Standard Minute Value (SMV). SAM (or SMV) means the time (in minutes) that it takes a worker to complete a specific operation or produce a specific garment. The SAM is often calculated by using a stopwatch. Sometimes its done by looking at a special table of times that have already been calculated, for every task needed to make a garment. Once the buyer company and employer know how long it takes a worker to complete a specific operation, they can compare this with other factories, or with a special table of times, to see how productive workers are.

Standard Allowed Minute /Standard Minute Value. What should it cover?

SAM (or SMV) should cover the time taken to perform an operation at normal or standard pace, plus an allowance for relaxation and possible stoppages. It should also be rated to allow workers to earn an incentive bonus, if they work above their expected performance. But be careful. Sometimes these calculations can be done incorrectly. Workers should ask management for training in these methods of work measurement, so that you can check the calculations done by the IE Department.

Buyer companies and employers can also use SAMs to calculate how much it costs them to pay wages and benefits for each minute worked. This is called the Labour Minute Value, that is to say, what the wage cost is for each minute it takes to make a garment. We have seen that buyer companies and employers can work out how long it takes to make a garment. This means that they should also be able to set realistic targets for workers. So now we need to ask: why is it that targets often cannot be reached?

ActionAid Productivity and workers rights

The myth of labour inefficiency

The correct term should be management inefficiency and not labour inefficiency.
Usually, managers and the IE department say that targets cannot be reached because of labour inefficiency. That is to say, they blame the workers for low productivity. But is this right? In fact, when we look more closely at the causes of so-called labour inefficiency, we often find that its the fault of management, and not the workers. For example, problems in the factory might be caused by: a lack of proper training for workers f atigue and lack of concentration among workers caused by excessive overtime a  n unrealistic incentive scheme where the production target at which a bonus can be earned is far too high a  n unrealistic time being calculated to produce the garment properly. So really the correct term should be management inefficiency and not labour inefficiency. This is an important distinction, especially when we come to discuss the payment of a living wage (see overleaf).

Discussion point
What causes downtime in your factory? Low levels of production from an assembly line can be caused by various factors, such as:  machine breakdown  a build up of unsewn components (the technical term is Work in Progress, or WIP)  components, such as fabric or zips, not available when needed  a high number of rejects/faulty garments, which reduces productivity worker(s) performing below standard worker(s) absent from the line changes in garment styles power cuts. Which factor(s) is/are the biggest cause of downtime in your factory? Who do you think is to blame for this downtime: managers; supervisors; workers; factory suppliers; or someone else?

Discussion point
Workers and productivity Usually, productivity problems lie in the hands of management. So do you think workers should be involved or not when changes are brought in to improve productivity?

Even if management inefficiency is the cause of excessive overtime, poor product quality and low wages, workers do need to be involved in improving productivity. Otherwise, the only ones to benefit will be your employer and the companies that it sells clothes to.

ActionAid Productivity and workers rights

Labour productivity and the living wage

In recent years, garment prices have generally been falling, both in the shops and at the factory gates. Yet the cost of living for workers who produce the garments has continued to rise. Trade unions and other labour organisations, in the producing countries and in the buyer countries, have stepped up their campaigning. They are putting pressure on the buyer companies to change the way they do business with the producer companies, freeing up money to pay workers like yourselves a living wage, to reduce the length of your working day and keep you free from harassment from your supervisors. This pressure has made some buyer companies take action. Many have adopted codes of conduct, which say that workers who produce their goods should be paid a living wage, should not be forced to do overtime and should have other rights respected. However, the buyer companies are not giving a bigger share of their profits to your employer so they can improve your pay and conditions of work. Instead, buyer companies are looking to their supplier factories, such as your employer, to improve productivity as a way of finding extra money for the workers. But can efforts to raise productivity also benefit workers? Logically, if your factory can make more garments in less time, it can make more money, as long as orders continue to come in. If this is done without increasing the pace of work, and without job losses, then it can be a positive thing for workers. But experience so far of productivity schemes has been mixed: I n China, some schemes have succeeded in bringing down working hours, while at the same time raising wages. However, this only ensured that the legal minimum wage was paid, and workers were still not paid for any faulty garments that were produced. Also, in

What is a living wage?

Most clothing workers in the world are paid a minimum wage. As you know, this is nowhere near what you and your family need to live on. You know what level of wage is necesary to cover all your basic needs, provide some money to pay for additional items and even save a little. This is what we call a living wage. The actual level of the living wage differs from country to country, because living costs vary across countries. There have been efforts recently to calculate a living wage for all workers across Asia the Asia Floor Wage. To find out more about this, see: www.asiafloorwage.org

ActionAid Productivity and workers rights

Labour productivity and the living wage continued

Key point: productivity schemes address management inefficiencies. They should not be seen as a way for buyer companies to deliver on their responsibility to ensure workers are paid a living wage.
some cases, these schemes were short lived and the employer only took more work on, leading once again to excessive overtime.  In Bangladesh, some productivity schemes have reduced the number of helpers on assembly lines. They have been retrained as machinists, thereby improving their skills and raising their wages through re-grading. This is a good thing. However, buyer companies have been able to claim that they are bringing about wage increases for the lowest paid workers, even though those same workers are still earning well below a living wage. A  lso, in China, one employer introduced a productivity bonus to try and retain more senior employees and reduce turnover. However, the company insisted on an unrealistic production target for these workers. When the worker representatives protested, the management did not change the targets. Eventually, many of the older workers quit their jobs at the factory, which defeated the point of the scheme. W  here LEAN (see page 2) has been introduced, and workers are grouped in cells rather than on lines, workers are complaining that they have been moved too close to the hazardous chemicals used in production. This is particularly prevalent in footwear factories. If you have seen no benefit for yourself and your fellow workers from productivity schemes, and in fact you are working harder than ever, then you need to do something about it

Discussion point
Does higher productivity benefit workers? Think back to your answers in the first discussion activity (on page one). Now consider these questions: W  hen management changed the way you work, did your wages increase? D  id it lead to a reduction in the overtime you worked, at no loss to your takehome pay? W  as there a reduction, or increase, in the pace of work in the factory, and specifically on the assembly line where you work? H  as there been a change in the way you are treated at your workplace, particularly by your supervisors? H  ave any jobs been lost in the factory as a result, or different types of contract been introduced? H  ave you acquired new skills as a result of the changes? If so, has this led to any pay increase or regrading? W  hen changes are introduced, is it usually only for a specific group of workers? A  re all the workers usually informed and involved in these changes?

ActionAid Productivity and workers rights

So what can workers do?

The fact is that most labour productivity schemes affect pay and working conditions. So, you and your fellow workers should be involved in any changes to improve productivity. For this, you need to prepare some questions for management.

Questions to ask management

1  How much money has the company saved as a result of this productivity schemes? 2  What are the workers going to get for their contribution to this schemes? 3 How many workers are working on the lines at present? 4 Are any jobs going to be lost? 5  If jobs are going to be lost, where will the workers be transferred to? 6  Can you guarantee the transferred workers will not have their pay cut? 7 What changes, if any, will be made to line targets? 8  How can workers earnings reflect any increase in productivity? Can we discuss bringing in a production bonus scheme or, if one already exists, how it can be improved? 9  Can independent training in work study (SAMs) be provided to the workers and their representatives?

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Why workers need a union

If you are going to make any lasting progress, you need to organise into a trade union to negotiate and collectively bargain with your employer.
Some productivity schemes try to involve workers by establishing worker committees. Both your employer, and the buyer companies, might think that these are a suitable substitute for a trade union. However, you need to be careful about these bodies. Worker committees often represent managements interests rather than workers, and some may not permit discussion on productivity. Remember the buying companys code of conduct should say that you have the right to join a union, of your own choice, for the purposes of bargaining with management. If you work in a factory where there is a worker committee rather than a trade union, there are some questions you might want to consider.

Discussion point
Worker committees or trade unions? W  hat system is there in your factory for workers and your representatives to discuss matters relating to pay and productivity with management? I s there a worker committee in your factory? If so, how was it set up? Was it democratically elected by workers? Or did management nominate the members? W  hat issues are discussed in the worker committee? Does it meet regularly and are minutes kept? Has it reached any agreements on workers pay and conditions? What rights do you have if management refuses to abide by the agreements? W  hat is the difference between a worker committee and a trade union? Which one is more likely to bring real improvements to workers pay and conditions of work, and why?

So, if you are going to make any lasting progress, you need to organise into a trade union to negotiate and collectively bargain with your employer. In some countries, managers are obliged by law to respect and implement any agreement reached with the union through collective bargaining. Your representatives are also going to need training on these issues, since they can often get quite complex.

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and no victimisation
Ask your employer, and any representative from companies that buy from your factory, for a written nonvictimisation guarantee.
You also need to make sure that your employer does not bully or harass any workers who join or become active in the union. This is known as victimisation. All workers across the world have the right to join a trade union of their choice (called freedom of association), and to bargain collectively with their employer. These rights are included in many of the buyer companies codes of conduct. Ask your employer, and any representative from companies that buy from your factory, for a written non-victimisation guarantee.

A model non-victimisation guarantee

(Name of company), in accordance with national and international law and the code of conduct of (name of buyer) governing freedom of association, hereby guarantees you, as an employee of this company, the right to join or form a union of your choice for the purposes of bargaining collectively with (name of company) on wages and working conditions. (Name of company) will not discriminate against you, nor victimise you, for exercising this right. Furthermore, (name of company) will adopt a positive attitude towards any trade union organisers granted access for the purposes of talking about the benefits of trade union membership. (Name of company) also undertakes to permit the formation of an organising committee in the factory whose members should operate without fear of hindrance, interference or victimisation.

Signed Signed ----------------------------------------------- ----------------------------------------------On behalf of (name of buyer) On behalf of (name of supplier)

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Key points

In todays commercial world, your employer will always be trying to cut costs. This may involve specific schemes to improve productivity. Workers need to be fully involved in these schemes. Any schemes designed to lower costs should not result in workers losing out, such as job cuts, pay cuts, a faster pace of work, or longer overtime. Productivity schemes should not be the only way to meet a buyers commitment to making sure the workers get a living wage, as set out in its code of conduct. Cost-cutting schemes or efficiencies are an opportunity for workers to sit down with the employer to negotiate better pay and conditions. Workers need to respond collectively to productivity schemes. A unionised workforce, involved in all aspects of workplace change, is the best way to deal with this. Workers faced with changes to working practices should seek advice from their local trade union.

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Publication date: 2012 Author: Doug Miller Editor: Celia Mather

ActionAid is a registered charity no 274467. Printed on recycled paper