productivity and workers’ rights - actionaid uk and workers’ rights ... such as re-organisation...

Productivity and workers’ rightsA 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

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.

Often your employer has little choice but to accept the buyer company’s terms, or the order will go to a factory that will accept the lower price.

The drive to increase productivity

Discussion point What is it like, working on your line?

• Areyoupaidabonusforreachingaproductiontarget?

• Orareyouexpectedtostaybehindtocompletethequotasetbyyouremployer,withoutanyextrapayforovertime?

• Ifso,whydoyouthinkyouremployerisdoingthis?

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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 company’s 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.

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

• Domanagerstimeworkerswithastopwatch?

• Areworkersconstantlybeingchangedaroundontheline?

• Haveanychangesbeenmadetoyourworkstation,suchastotheseat,benchormachine?

• Aretherefewerbundleswaitingtobeworkedonbyyourassemblyline?

• Areyouconstantlybeingurgedtoproducemore?

• Hasyourproductiontargetbeenincreased?Ifso,howmanytimesinthelastyear?

• Iswhatyoumakemeasuredonanhourlyorweeklybasis?

• Haveyounoticedanyotherchangestotheworkprocessatyourfactory?


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’?LEANisperhapsthemostradicalwayofimprovingproductivity.ItisbasedonasystemdevelopedbythecarmanufacturerToyota.

LEANfocusesoncontinuouslyimprovingthewayafactoryworks,tomakeitevermoreefficient.

UnderLEAN,workersmaybeorganisedinto‘cells’.Thesearegroupsofworkerstrainedinseveralskillswhocanmakeawholeproduct.Cellshaveproductiontargetsforthewholegroupratherthanforindividuals.

Thisisdifferentfromtheproductbeingmadeonanassemblyline,whereworkerswithdifferentskillseachdoaparticulartask.

LEANisintendedtochangethecultureofafactoryaswellasthephysicalwaythatthefactoryandworkstationsareorganised.

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

The drive to increase productivity continued

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Inputswhat it costs your factory in labour, machines, rent, etc

Outputwhat your factory makes in value

Productivity


Who wants higher productivity?

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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 doesn’t it?

But there are dangers in this for the workers.

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 company’s 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 risks for workers

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If workers don’t 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

• with extra pay, but not in line with how much extra you are actually producing

• working in an unsafe environment.

So let’s pause and think about this for a moment, as workers...


Calculating labour productivity

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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 isto calculate the time taken to make a specificgarment. This is usually called a SAM (StandardAllowed Minute), although some factories callthis the Standard Minute Value (SMV).

SAM (or SMV) means the time (in minutes)that it takes a worker to complete a specificoperation or produce a specific garment. TheSAM is often calculated by using a stopwatch.Sometimes it’s done by looking at a specialtable of times that have already been calculated,for every task needed to make a garment.

Once the buyer company and employer knowhow long it takes a worker to complete aspecific operation, they can compare this withother 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(orSMV)shouldcoverthetimetakentoperformanoperationatnormalorstandardpace,plusanallowanceforrelaxationandpossiblestoppages.Itshouldalsoberatedtoallowworkerstoearnanincentivebonus,iftheyworkabovetheirexpectedperformance.

Butbecareful.Sometimesthesecalculationscanbedoneincorrectly.Workersshouldaskmanagementfortraininginthesemethodsofworkmeasurement,sothatyoucancheckthecalculationsdonebytheIEDepartment.

Buyer companies and employers can also useSAMs to calculate how much it costs themto pay wages and benefits for each minuteworked. This is called the Labour MinuteValue, that is to say, what the wage cost is foreach minute it takes to make a garment.

We have seen that buyer companies andemployers can work out how long it takes tomake a garment. This means that they shouldalso be able to set realistic targets for workers.So now we need to ask: why is it that targetsoften cannot be reached?

Buyer companies and employers can also use SAMs to calculate how much it costs them to pay wages and benefits for each minute worked.


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 it’s 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

• fatigue and lack of concentration among workers caused by excessive overtime

• an unrealistic incentive scheme – where the production target at which a bonus can be earned is far too high

• an 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).

The correct term should be ‘management’ inefficiency and not ‘labour’ inefficiency.

The myth of labour inefficiency

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Discussion point What causes downtime in your factory?

Lowlevelsofproductionfromanassemblylinecanbecausedbyvariousfactors,suchas:• machinebreakdown• abuildupofunsewncomponents(thetechnicaltermisWorkinProgress,orWIP)

• components,suchasfabricorzips,notavailablewhenneeded

• ahighnumberofrejects/faultygarments,whichreducesproductivity

• worker(s)performingbelowstandard• worker(s)absentfromtheline• changesingarmentstyles• powercuts.

Whichfactor(s)is/arethebiggestcauseof‘downtime’inyourfactory?

Whodoyouthinkistoblameforthisdowntime:managers;supervisors;workers;factorysuppliers;orsomeoneelse?

Discussion point Workers and productivity

Usually,productivityproblemslieinthehandsofmanagement.Sodoyouthinkworkersshouldbeinvolvedornotwhenchangesarebroughtintoimproveproductivity?

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.


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

Labour productivity and the ‘living wage’

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What is a ‘living wage’?Mostclothingworkersintheworldarepaidaminimumwage.Asyouknow,thisisnowherenearwhatyouandyourfamilyneedtoliveon.

Youknowwhatlevelofwageisnecesarytocoverallyourbasicneeds,providesomemoneytopayforadditionalitemsandevensavealittle.Thisiswhatwecalla‘livingwage’.Theactuallevelofthe‘livingwage’differsfromcountrytocountry,becauselivingcostsvaryacrosscountries.

TherehavebeeneffortsrecentlytocalculatealivingwageforallworkersacrossAsia–theAsia Floor Wage.Tofindoutmoreaboutthis,see:www.asiafloorwage.org

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:

• In 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


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.

• Also, 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.

• Where 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…

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.

Labour productivity and the ‘living wage’ continued

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Discussion point Does higher productivity benefit workers?

Thinkbacktoyouranswersinthefirstdiscussionactivity(onpageone).Nowconsiderthesequestions:

• Whenmanagementchangedthewayyouwork,didyourwagesincrease?

• Diditleadtoareductionintheovertimeyouworked,atnolosstoyourtake-homepay?

• Wasthereareduction,orincrease,inthepaceofworkinthefactory,andspecificallyontheassemblylinewhereyouwork?

• Hastherebeenachangeinthewayyouaretreatedatyourworkplace,particularlybyyoursupervisors?

• Haveanyjobsbeenlostinthefactoryasaresult,ordifferenttypesofcontractbeenintroduced?

• Haveyouacquirednewskillsasaresultofthechanges?Ifso,hasthisledtoanypayincreaseorregrading?

• Whenchangesareintroduced,isitusuallyonlyforaspecificgroupofworkers?

• Arealltheworkersusuallyinformedandinvolvedinthesechanges?


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.

So what can workers do?

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Questions to ask management1 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?

For this, you need to prepare some questions for management.


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 management’s interests rather than workers, and some may not permit discussion on productivity.

Remember – the buying company’s 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.

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.

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.

Why workers need a union…

Discussion point Worker committees or trade unions?

• Whatsystemisthereinyourfactoryforworkersandyourrepresentativestodiscussmattersrelatingtopayandproductivitywithmanagement?

• Isthereaworkercommitteeinyourfactory?Ifso,howwasitsetup?Wasitdemocraticallyelectedbyworkers?Ordidmanagementnominatethemembers?

• Whatissuesarediscussedintheworkercommittee?Doesitmeetregularlyandareminuteskept?Hasitreachedanyagreementsonworkers’payandconditions?Whatrightsdoyouhaveifmanagementrefusestoabidebytheagreements?

• Whatisthedifferencebetweenaworkercommitteeandatradeunion?Whichoneismorelikelytobringrealimprovementstoworkers’payandconditionsofwork,andwhy?

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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.

…and no victimisation

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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)

Ask your employer, and any representative from companies that buy from your factory, for a written non-victimisation guarantee.


Key points

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Intoday’scommercialworld,youremployerwillalwaysbetrying to cut costs. This may involve specific schemes to improve productivity. Workers need to be fully involved in these schemes.

• Anyschemesdesignedtolowercostsshouldnotresultinworkers losing out, such as job cuts, pay cuts, a faster pace of work, or longer overtime.

• Productivityschemesshouldnotbetheonlywaytomeet a buyer’s commitment to making sure the workers get a living wage, as set out in its code of conduct.

• Cost-cuttingschemesorefficienciesareanopportunityforworkers to sit down with the employer to negotiate better pay and conditions.

• Workersneedtorespondcollectivelytoproductivity schemes. A unionised workforce, involved in all aspects of workplace change, is the best way to deal with this.

• Workersfacedwithchangestoworkingpracticesshouldseekadvice from their local trade union.

ChatawayHouse, LeachRoad,Chard,[email protected]

ActionAidisaregisteredcharityno.274467.Printed onrecycledpaper.

www.actionaid.org.ukActionAid,

Publication date: 2012Author: Doug MillerEditor: Celia Mather

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

productivity and workers’ rights - actionaid uk and workers’ rights ... such as re-organisation...

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