Analysis: A novel labour compliance tool – is it for your company?

August 2002

by Jon Entine

Jon Entine reviews Business for Social Responsibility’s new Labour Law Database and is impressed

So, you're Levi Straus, Reebok or Mattel (or a foot soldier for any multinational apparel retailer, shoe company or toy maker), and you're scouting for new factory sites. After all, this is the age of capitalist global hopscotch, where margins are constantly under assault and a better deal is just a government incentive or devalued currency away.

So how do you choose between Macau and Morocco, Sri Lanka and El Salvador? The cold reality is that the main lure is dirt-cheap wages. But now that activist groups and journalists ask embarrassing questions about child labour standards, environmental conditions, pregnancy benefits, collective bargaining rights and the like, companies are looking to keep their noses clean.

Consider Nike. It has 35 contract factories in Taiwan, 49 in South Korea, 3 in Pakistan, yet none in impoverished Cambodia, which offers the cheapest wages of all. Why not? Well, it used to have two contract factories in Cambodia, but closed them down after BBC reported that three girls in one factory were less than 15 years old. Nike didn't want the heat and pulled out.

So how does a company avoid such blow-ups? Knowledge is power. Until now, many firms canvassing for new sites or trying to resolve disputes scrambled for information locally or hired consultants, such as Chicago-based Baker & McKenzie, which operates in dozens of countries and focuses on personnel issues. That's expensive. Now there's an alternative to consider in some circumstances.

Business for Social Responsibility (BSR), the California-based trade organisation, has developed a nifty international labour compliance tool, accessed through the internet, with the rather inelegant name of the Labour Law Database. Ten-year old BSR has developed a solid reputation for reaching beyond its entrepreneurial counter-culture roots – founding companies include natural toothpaste manufacturer Tom's of Maine and Ben & Jerry's – to become a serious player in the "ethics in business" movement. It began by offering yearly conferences where jean-clad Ben Cohen lectured awestruck business wannabees, but upgraded its ambitions under the steady leadership of Robert Dunn, a former Levi Straus human resources executive. It now has a world membership of 1400 firms with nearly US$2 trillion in annual revenues.

BSR's raison d'etre is information. That's clear from this well-conceived database, which provides a central repository on the critical minutiae of labour standards, vetted by none other than Baker & McKenzie. So rather than spending tens of thousands of dollars or more on country-by-country research reports, firms can plunk down $20,000 (non-BSR members pay an extra $5,000) to access data on 50 countries (with another dozen in the pipeline).

Is it worth the money? BSR human rights lieutenant Debbie O'Brien and public relations senior manager David Eichberg took me on a test drive. There's a short introductory historical summary on each country that links to a more detailed profile of key issues such as child labour standards, disciplinary practices, wages and benefits, collective bargaining rights, and health and safety concerns. Each citation is cross-referenced with the actual law, although the full legal documents themselves are not accessible.

"The labour law database is the meat and potatoes," says BSR vice president Aron Cramer. "The salad is the various tools companies can use to enhance compliance." Cramer is referring to the most intriguing, if sometimes frustrating, part of the database, the search engine. Most simply, it enables users to find keywords within reports or search across multiple countries. Users can also designate a variety of key issues and see in a matrix how selected countries compare. That's pretty neat, but it sounds better than it is. The answers to any of fifty pre-selected questions – for example, whether a country has a law for the maximum daily working hours for minors or whether it follows the International Labour Organization standards on freedom of association – are presented only in a "yes" and "no" format. That limits the tool's potential value. But it's a start, and functions undoubtedly will be added as more companies subscribe and voice their needs. About twenty or so have signed up so far, though BSR refused to name any, claiming the privacy concerns of the companies.

Should a corporation or an anti-sweatshop activist group run out and buy access to this database? It's certainly a great resource. The price is reasonable for the quality of data. And considering BSR's good intentions, the tool will certainly evolve. That said, the database is too limited to replace the kind of detailed consulting that a Baker & McKenzie could provide when huge liabilities or public relations brouhahas are on the line. After all, one misstep and BBC or Sweatshop Watch will be all over you. For those looking for quick answers or summaries on otherwise obscure labour standards in far flung locales, or for field consultants who need readily accessible and reliable information, BSR's Labour Law Database can be an important and even essential resource.

Jon Entine is scholar-in-residence at Miami University (Ohio) and adjunct fellow with the American Enterprise Institute in Washington, DC. Jon is also an award-winning freelance journalist.

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