Labour rights in China

by Henry Farrell on April 22, 2005

The FT has a long investigative article, suggesting that schemes in which Western firms monitor their Chinese subcontractors to see whether they conform to labour standards aren’t working. The subcontractors are getting increasingly adept at cooking the books.

Factory managers in China are becoming increasingly sophisticated at falsifying worker time cards and payroll documents to disguise irregularities including underpayment, excessive hours and inadequate health and safety provision. Auditors estimate that more than half of factories they see in China are forging some of their records – meaning that many of the international companies that source from China are learning less about the actual working conditions in the factories they use, even as they step up efforts to monitor them.

But if Chinese suppliers are only pretending to comply with these standards, the auditors hired by Western companies are often only pretending to check up on them properly.

As the social compliance auditing industry has grown in response to increased demand it has left many auditors with less time to spend at each factory. “I tell auditors that I cannot tell them the truth in relation to some of their questions. They smile and move on to something else,” a manager at one large garment factory in Dongguan told CSR Asia, a Hong Kong-based research group. “They are complicit in the deception.”

Update: Thanks to Stephen Frost at CSR Asia for pointing to a no-sub-required version of the story, and to the CSR-Asia report quoted in the FT story



Chris Martin 04.22.05 at 5:42 pm

Sorry to bug you again, but the RSS feed isn’t working.


Henry 04.22.05 at 5:48 pm

Dunno what the matter is – seems to work fine for me on FeedDemon, FeedReader and Thunderbird’s primitive RSS system. Is anyone else having this problem?


Stephen Frost 04.22.05 at 6:29 pm

You can find our (CSR Asia’s) full interview with the anonymous factory manager in China who told us auditors “are complicit in the deception” here (opens as pdf, starts on first page). Ignoring the fact that they quoted us, I think the FT story is required reading for anyone interested in the issue. The story, by the way, can be seen full here).


Kieran Healy 04.22.05 at 6:51 pm

Roll on the Lochner vs New York fans.


bi 04.23.05 at 5:37 am

Man, market forces just aren’t working to stop this…


greatlakescouser 04.23.05 at 10:56 am

This is simply another undersourced argument defining market failure as the market’s inability to provide perfect results every time. Never mind that private companies established inspection regimes, that the inspections are having a positive effect (something both articles admit at least implicitly), and that companies are moving to address the deficiencies in the inspections. No, it’s that deficiencies exist at all (according to Messrs. Some, Many and Most and as confirmed by Ms. N.H. Real-Name) that’s taken as iron clad proof that private inspections can never ever work.
So what’s the preferred solution of CSR and the others? You’re apparently not willing to allow the companies to sort things out, so more government inspections? In guanxi China? And in the face of employees wanting to work these long hours?
BTW, Kieran, feel free to square your dislike of Lochner with your presumed appreciation for Griswold, Roe and the other cases that allow for individual freedom.


Stephen Frost 04.23.05 at 10:29 pm

greatlakescouser: I would have appreciated it if you contacted me before you misreprepresented CSR Asia’s work. At the very least you could have flicked through some of our newsletters before painting us as i) a company with no clue about China or ii) advocates of the state over the market.

I have neither the time nor interest in arguing the merits or otherwise of the market or private inspections. The only point that interests me is that a great number of companies sourcing in China and across Asia have come to the conclusion themselves that inspections are not producing the kinds of results required. CSR Asia works with some of those companies to “sort things out”.

Our preferred solution? We don’t have one because we believe every case is different. However, we think that a mix of audits, training programs in factories (for management and employees), and links with government bodies is as good a place as any to start. The throwaway line implying that in “guanxi China” government inspections are useless is in our opinion an unhelpful and simplistic reading of China. As is the notion that workers want to work 120-hour weeks to make minimum wages (which workers should receive for 40 hours). Until we move beyond generalisations we run the risk of trench warfare where opposing sides lob grenades at each other but barely move forward into an area where both workers and management benefit.

In our view, there are too many people of all political persuasions assuming too much about what various peopole in China or elsewhere think. CSR Asia’s weekly newsletter translates a great deal of material from Chinese sources and interviews Chinese workers and managers to provide a cross-section of views that we believe will broaden the dialogue required to ensure programs do work.

We’re putting our money where our mouth is on this. We don’t expect people to agree with us because we have, but we’d appreciate enagement with us on our actions rather than flip comments based on beliefs about what works or doesn’t in Chinese supply chains.

When you’re in Hong Kong next time, please feel free to ring me (see the newsletter for my phone number). I’d be happy to show you what we do, have you meet our employees in Shenzhen, and if possible include you in something we’re doing in China. Then you can criticise us to your heart’s content. Who knows, we might even learn something.

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