Responsible exit and re-engagement; Soccer ball production in Pakistan
In November of 2006 global sports brand, Nike, faced an intransigent problem of non-compliance with social norms at its major source of hand-stitched soccer balls in the industrial centre of Sialkot, Pakistan. Despite a coordinated attempt over the previous ten years by international buyers, government and the ILO-sponsored Independent Monitoring Association (IMAC) to eradicate child labour from the hand-stitched football supply chain in Pakistan, this problem had not been altogether solved. Monitoring feedback from the supplier was showing repeated failures to abide by the company’s code of conduct that is based on the core ILO conventions, while even the old problem of child labour was rumoured to remain an issue.
When management of the supply factory repeatedly failed to improve, Nike reluctantly stated its intention to stop future purchases of footballs from Pakistan and to seek alternative supplies from factories elsewhere that gave greater transparency and assurance of acceptable standards. This decision had a profound effect on the local industry and eventually led to the closure of the non-compliant factory with the loss of over 4,000 direct jobs and an equivalent number of home workers’ and associated workers’ jobs.
Although determined to make a responsible withdrawal from the recalcitrant supplier, Nike issued a challenge to Sialkot’s industrialists. If Nike could be satisfied that any new supplier from Pakistan would adopt systems and practices that guaranteed social compliance with international standards, it would reconsider its decision to withdraw from the country and would give full support to build capacity and technical capability to continue with football production in Pakistan under ethical conditions.
Because of previous positive experience of working with the Just Solutions Network, Nike called on us to help in this complicated endeavour.
The problem
The traditional model of hand-stitched football production in Sialkot was, and still is to a large extent, based on a ‘cottage industry’ of scattered home workers. Factories manufacture the laminated sheet from which footballs are made, stamp out the blanks for stitching and distribute these via middlemen (called ‘makers’), who in turn pass them to teams of stitchers in the villages surrounding Sialkot. The stitchers may work in more or less recognised ‘centres’ (usually sheds, barns or houses) or in their own homes. Hours of work are flexible – when they are not stitching footballs many workers tend their own smallholdings and one or two goats. Monitoring of work time, conditions, pay and child labour is extremely difficult under these circumstances.
Nike was facing accusations that children were working to produce their footballs within this system, despite monitoring; but it had no control over this indirectly sub-contracted labour force in the geographically dispersed villages. Nevertheless, many families were dependent for a significant proportion of their income on the soccer balls headed for Nike’s supply chain via this sub-contracted stitching activity. A pull-out from the main supplier could leave over 8,000 people jobless and in hardship.
The two key problems were, therefore:
- How to prevent a disaster for the workers when orders were stopped to the initial supplier;
- How to create a new production model that could ensure greater control over working conditions and other vital social factors.
Just Solutions’ intervention
Through a long association with the Pakistan labour rights movement, Just Solutions was able to partner with the Pakistan Institute for Labour Education and Research (PILER) in preparing and implementing a strategic response.
Nike was able to identify a small number of factories that had the technical capacity and management to act as a flexible base for a new production model. Just Solutions’ local partners also investigated these factories from a social and labour compliance viewpoint. After cross-matching results, the Silver Star company emerged as having the all-round best potential for this bold experiment. Under this plan, production would no longer be farmed out to far-flung stitchers via the ‘makers’. Instead, workers were recruited to come to the factory itself and to stitch there in a more efficient environment where working conditions could be controlled and monitored. Pay increased as a result of cutting out the middlemen and from overall efficiencies of working with adequate support. Transport has been provided to bring workers from the villages to the factory and back home safely. Plans were laid for a special ‘women only’ centre and factory section to meet local cultural norms.
Even so, not all workers from the previous supplier could be re-employed at the new facility. With PILER, Just Solutions created a contact centre in Sialkot for displaced workers and cooperated with the local Chamber of Commerce, the local Manpower Office and other Sialkot employers to place as many unemployed workers as possible in new employment. Others received retraining as drivers, construction equipment operators, surgical instrument makers and even computer operators, in fulfilment of the ‘responsible withdrawal ‘commitment. Those who were made redundant from the original supplier were supported in their claims through the courts to ensure that they received proper financial compensation (not a ‘given’ in Pakistan).
Inside the factory a new approach to workplace relations was created. Workers were enabled freely to choose shop floor representatives from among their own number who were specially trained to lead small working groups in discussion over workplace themes. These representatives were able to feed back to management many useful ideas as the new factory developed. Eventually a workplace committee of trained representatives was formed that could interact with managers on a regular basis to monitor and regulate workplace conditions in keeping with international standards and the Nike Code of Conduct. The factory found this work so supportive that it has continued the relationship with Just Solutions’ local partner, PILER, for ongoing workforce training.
The result
For Nike, this new model of production and workplace relations brought not only more control over a more efficient manufacturing process, but also a greatly improved ability to monitor and ensure correct social standards in an environment where such abuses as child labour could not occur.
For workers at the new factory income was considerably increased because of the efficiency of the system and the easier working atmosphere. Workers who had been displaced in the move were either found alternative gainful employment, with re-training if necessary, or received meaningful compensation through direct representation in the courts by lawyers hired by the programme.
Legal support work carried out by Just Solutions’ local PILER team won the biggest redundancy settlement in Pakistan’s legal history for those workers who were displaced.
Production of high-quality hand-stitched soccer balls continues in Pakistan under conditions of which the brand, the industry and its workers can be proud.