In our last post, we reviewed the necessity of equality of treatment, corresponding to section H of the report. In today’s post, we cover section I of The John Lewis Partnership‘s “Responsible Sourcing Supplier Workbook”, which covers wages.

Although governments set a minimum wage in most countries, which vary according to region, industry, and type of job, it is also the case that minimum wages are often not adequately enforced in many countries, especially developing ones. The most notable offenders often include:

• informal sectors
• suppliers who use subcontractors, homeworkers, and casual workers
• repeated short-term or probationary contract workers
• jobs that pay on a piece-rate basis
• countries that dictate a minimum wage that falls (well) below the cost of living

The last two offenders are often all too common. In most countries, legislation attempts to set the piece-rate at a level that is estimated to be sufficient to ensure the worker earns the equivalent of a minimum wage in a set number of hours, however, this is hard to calculate and notoriously hard to enforce and many workers in the plants of the worst offending suppliers and countries will have to work arduously long hours to reach a wage sufficient to meet their basic cost of living. Furthermore, in the worst of the worst, some employers will not be transparent about piece rates and wage requirements and the workers will have no understanding of how their wages are calculated relative to how they should be calculated.

Furthermore, in some countries where minimum wages fall below the cost of living, their wages will be further eroded through a system of, usually illegal, fines and deductions for “misbehavior, lateness, production errors, uniforms, supplies, and accommodation”, among others.

As with the other subjects tackled by the workbook, JLP points out some startling facts:

• Almost 10% of countries do not have a minimum wage legislation of any form
• A recent survey in China found that 32% of workers were being paid below the legal minimum wage
• An estimated 1.4 Billion Workers (half of the world’s working population and almost one quarter of the population) live on less than $2 / day
• An estimated 550 million people, or 20% of total world employment, live on less than $1 / day
• Even in the EU, minimum wage rates vary by a factor of more than 10: from 115 euros/month in Latvia to 1,500 euros/month in Luxembourg

And if this isn’t enough to force you to ensure you, your partners, and suppliers are paying fair wages, consider the following:

• workers who cannot make a living working regular hours in one job are forced into a cycle of poverty where they have to take other jobs during evenings and weekends – this makes them tired and worried, and we already know that tired, worried, and stressed workers are less productive, more error-prone, and take significantly more time off than those who are rested and content with their jobs
• compensation is the basis of worker loyalty; as numerous responsible sourcing studies and human resource retention studies have found
• as Corporate Social Responsibility becomes more common and countries take action, your risk of serious fines, levies, and workforce departure will dramatically increase if you don’t take action now to ensure you are in compliance and paying, and treating, your workers fairly and equitably

Specifically, make sure that:

• Wages meet national legal requirements and industry standards
• Wages meet basic needs plus some discretionary income;
  the Living Wage Summit proposes the following formula to calculate your minimum wage, and you should pay this if it exceeds the legal minimum wage:
  (avg household size * avg cost basic needs per person /
  avg number adult earners per household) * 1.1
• Wage information, clearly written and inclusive of the payment process and job requirements (hours, pieces, etc.) must be provided to workers before they agree to employment
• Wages shall be paid directly to the worker in cash, cheque, or transfer at the agreed times and in full
• Pay slips shall be made available
• Deductions are not utilized as a disciplinary measure – only deductions required by law are permissible (unless they are allowed, such as 401K withholdings, and agreed to by the worker)
• Wage records are kept for sufficient periods
• Overtime is paid at least at the legally required premium
• Wages are not held from workers as a deposit

In our next post, we’ll tackle the ninth major issue addressed by the workbook, regular employment. (You can access all of the posts in the series (to-date) by selecting the JLP category at any time.)

In our last post, we covered the issues surrounding working hours, corresponding to section G of the report. In today’s post, we cover section H of The John Lewis Partnership‘s “Responsible Sourcing Supplier Workbook” which covers equality of treatment.

All workers should be paid the same for the same job and have access to the same opportunities and benefits. Employment discrimination happens when someone is treated differently because of gender, race, national origin, religion, caste, class, age, disability, marital status, sexual orientation, political affiliation, or union membership.

Discrimination comes in all shapes and sizes. It can also occur in all stages of the employment process: in hiring, compensation, training, promotion, termination, and retirement. Victims of discrimination may:

• be less likely to be hired
• be paid differently
• be unfairly dismissed
• suffer verbal or physical bullying
• receive little or no training
• have fewer promotion opportunities

Certain countries have particularly common forms of discrimination that you need to watch out for:

• gender or religious discrimination in the Middle East & North Africa
• union discrimination in Colombia
• caste discrimination in India
• migrant worker discrimination in China

Certain types of discrimination, especially compensation-based discrimination, are still very common, even in developed countries:

• women in the UK earn, on average, 17% less than men
• women in Malaysia earn, on average, 32% less than men
• in the UK, 30,000 women are dismissed a year simply because they are pregnant

The workbook offers a starting checklist that you can use to make sure that discrimination does not become a problem for your company:

• all managers are fully aware of the laws regarding discrimination in the country of operation and the policies of your organization
• there is an equal opportunity policy in place
• everyone receives equitable pay for the same work
• there are no medical tests as part of the recruitment process
• maternity and paternity leave is permitted
• there is a clear procedure for raising grievances

In our next post, we’ll tackle the eigth major issue addressed by the workbook, wages. (You can access all of the posts in the series (to-date) by selecting the JLP category at any time.)

In our last post, we discussed the importance of employee representation and their need to freely associate, corresponding to section F of the report. In today’s post, we cover section G of The John Lewis Partnership‘s “Responsible Sourcing Supplier Workbook” which covers working hours.

In some countries, such as Vietnam, Thailand, Indonesia, and China in particular, some workers routinely work 12-16 hours, 7 days a week, in peak periods. Even in the UK, studies have found that a surprisingly high proportion of workers in the food production industry exceed 48 hours per week (and even 60 hours per week) on a regular basis. Furthermore, it is often the case that workers are not allowed to refuse overtime. The facts reported in the workbook are staggering:

• nine economies reported over 2,000 annual hours worked per person in the latest year for which data was available to the ILO
• 17% of UK employees work more than 48 hours per week
• one in four workers in the UK working long hours reported suffering a physical ailment or stress as a result
• an estimated 1.3 Billion working days are lost each year in the UK due to stress-related illness
• workers in China often work 360 hours per month, and some up to 400 hours per month, almost twice the legal limit

This issue should be tackled immediately if you think you may have a problem. You can start by doing the following:

• keep good records;
  this will allow you to identify the “hot spots” where long hours are the norm and seasonal peaks
• gradually reduce hours;
  this will reduce employee stress and exhaustion and will result in increased productivity without any additional action; furthermore, improved production planning, communication, and training will also result in increased productivity allowing for a further hour reduction if overtime is a serious issue
• increase wages to a fair level;
  if many employees are working long hours by choice, then this is a sign that they are not able to make ends meet working normal hours and wages need to be raised; furthermore, the increase in employee contentment and decrease in overtime-related stress and exhaustion should make up for most, if not all, of the productivity loss
• make sure all overtime is voluntary
• ensure all employees have enough time off for rest and sleep; furthermore, ensure that they have at least one day off a week, even during seasonal peaks – this can be accomplished with proper planning
• make sure management fully understands the law and the rules related to overtime;
  managers who don’t are more likely than the employee to be the source of the problem

In our next post, we’ll tackle the seventh major issue addressed by the workbook, that of equality of treatment. (You can access all of the posts in the series (to-date) by selecting the JLP category at any time.)

In our last post, we focussed on discipline, and how you prevent discipline-related issues,

corresponding to section E of the report.

In today’s post, we cover section F of The John Lewis Partnership‘s “Responsible Sourcing Supplier Workbook” which covers freedom of association and employee representation.

In addition to a worker’s right to socialize with whomever they choose, freedom of association refers to a worker’s right to form and join a workers’ association, council, group, committee, and / or union of their choosing. A worker must have the right to belong to a group that provides them with an effective process to raise their concerns with management and which works to ensure continual good communication between workers and management.

Freedom of association and employee representation is important because it contributes to an employee’s sense of well being. It’s a proven fact that content employees who enjoy going to work everyday are much more productive than those who hate their jobs and fear going to work because they are degraded or abused. Consider the statistic in our last post that found that workplace bullying contributes to an estimated loss of 18 million working days every year in the UK alone. Imagine the global productivity loss from poor disciplinary management alone!

Associations, trade unions, and committees, when formed under good intentions and properly led, can help significantly by:

• improving two-way communication between employees and managers
• negotiating improvements to working conditions and compensation
• acting as a positive force for change

It is true that there are often real and perceived barriers to freedom of association and employee representation, which include:

• many companies find the concept of a union or worker’s group threatening
• workers are often scared of putting themselves forward for election
• in some countries, the formation of a union is illegal
• sometimes the worker who is elected does not have the skills or training to effectively run the organization

But it is also true that these barriers can be easily overcome with education and a positive approach. The report offers some suggestions:

• suggestion boxes as a mechanism for anonymous reporting of issues
• committees to act as an interface between employees and management
• informal committees to handle specific issues

The report also offers a checklist that you can follow to make sure that your employees have sufficient freedom of association and employee representation:

• workers are able to collectively bargain regarding key aspects of employment
• workers have a union, association, or committee they can use for reporting issues and collectively bargaining
• management meets regularly with the union, association, or committee that handles employee representation
• management actively responds to concerns and communicates outcomes
• members or representatives of unions, associations, or committee are not treated differently in any way
• employee representatives of such organizations can carry out their duties within working hours without penalty

Anyone who knows me well might wonder why I do not have a problem with this section of the JLP responsible sourcing workbook since they will believe I am adamantly against unions, as I have spoken quite negatively about them many times in the past. However, that view is specific to the formation of unions in IT and other knowledge industries in developed countries where adequate government protection exists to protect basic employee rights and freedoms. With regards to agricultural, manufacturing, and other hard-labor based industries in developing countries where there are little or no laws to protect the rights and freedoms of an employee, my stance is different. In that context, I have no problems with unions.

Furthermore, I believe unions could have a positive impact on many developing economies, just as they did in our own during the industrial revolution which took place a little more than a hundred years ago. Back then, we didn’t have all of the laws we do today that protect basic worker rights and freedoms. Furthermore, in a labor-based industry, the productivity is not going to vary much between your worst employee and best employee, and, thus, the notion of an open-market, while quite beneficial to a knowledge-based job where your top employee is order of magnitudes more productive than your average employee, does not have the same effect. And even if it had a slight impact on an organization’s ability to attract the best and brightest, considering the atrocious working conditions in some countries, this would be more than compensated by the improved working conditions that would result.

In our next post, we’ll tackle the sixth major issue addressed by the workbook, that of working hours. (You can access all of the posts in the series (to-date) by selecting the JLP category at any time.)

In our last post, we discussed the issues of health, safety, and hygiene and the hazards you need to look out for, corresponding to section D of the report.

In today’s post, we cover section E of The John Lewis Partnership‘s “Responsible Sourcing Supplier Workbook” which covers discipline.

Discipline refers to the treatment of workers and the issue here is whether or not they are treated fairly and with respect. Unacceptable discipline ranges from verbal abuse, shouting and threat of abuse through bullying and illegal fines all the way to sexual harassment and abuse, beatings, and humiliating punishments.

Why is this an issue? Research by the John Lewis Partnership has discovered the following facts:

• a sexual harassment study in commercial agriculture and textile manufacturing in Kenya found that over 90% of respondents had experienced or observed sexual abuse and 95% of women who had suffered abuse were afraid to report the problem for fear of losing their jobs
• workers in England and Wales experienced an estimated 849,000 incidents of violence in 2002/2003
• workplace bullying contributes to an estimated loss of 18 million working days every year in the UK as victims of workplace bullying take an average of seven additional days off per year

In order to prevent discipline-related issues, as an employer, you need to ensure that:

• no worker is subject to, or threatened with, physical, sexual, or verbal abuse
• managers, supervisors, and line-leaders do not use any kind of harassment, bullying, or intimidation
• fines are not used as a disciplinary measure
• disciplinary policies and procedures are transparent, applied equally to all employers, and effectively communicated to all workers in their language
• there is a formal grievance procedure in place
• managers and supervisors understand the disciplinary procedures
• records are kept on disciplinary and grievance actions
• dismissals are only on legal grounds
• positive incentives are in place to promote good behavior

In our next post, we’ll tackle the fifth major issue addressed by the workbook, freedom of association and employee representation. (You can access all of the posts in the series (to-date) by selecting the JLP category at any time.)