by Ed Shepherd

In 1997 when ALU first investigated Codes of Conduct (CoCos), adoption of a CoCo was seen as progress because until around that time transnational corporations (TNCs) denied responsibility for the way their sub-contractors treated workers.

Labour activists' immediate fear was that TNCs would use CoCos as a public relations tool. Since then, public opinion has forced TNCs to accept responsibility for the labour standards in sub-contracted factories, and we are now overwhelmed by a host of CoCos. However, except for a few well publicised examples, factory working conditions have not even kept pace with the low standards of 1997; they have actually deteriorated. The perceived danger CoCos now pose is as a tool to privatise labour standards.

While showcase factories have undoubtedly cleaned up their operations, in general wages continue to fall and dangerous working conditions still prevail. The arrival of CoCos has not reduced the rising number of preventable factory fires which continue to kill workers because there is no pressure on companies to remove b/locked fire exits and bars on windows which prevent workers' escape.

As before, ALU is still grappling with the problem of CoCos being implemented without worker participation. Instead they were implemented and monitored by the companies themselves, the results of which were treated as confidential.

After companies felt profits threatened by international scandals, particularly over sweated, forced, and child labour, TNCs increasingly turned to social accounting firms like PricewaterhouseCoopers, Intertek, SGS, and DNV.

The introduction of external monitors and the associated hype about core labour standards helps build an image for consumers that 'independent' third parties are watchdogs over the TNCs. This tactic helps build the 'Reputation Assurance' that TNCs are desperate to protect. It also defends them against accusations of the crook investigating his own crimes, as in the case of internal monitoring.

Monitoring by social auditing firms and non-governmental organisations is a growing business capable of making a profit, with all the dangers that this implies for the independence of monitors.

For reasons which are unclear at present, auditors continue to ignore many instances of non-compliance with CoCos, possibly because they are not labour or safety experts. When auditors note non-compliance, the typical TNC excuses the error and looks to a future when problems will somehow be resolved. Even worse, publicity about serious CoCo violation actually encourages a TNC to cancel the contract, resulting in workers being sacked while the TNC transfers the contract to an unknown factory. Tactics like this demonstrate lack of commitment by TNCs to uphold workers' rights, while sacked workers suffer the harsh reality of unemployment.

The same TNCs that try to excuse their failure by saying CoCos will take time to be fully effective, strictly impose other detailed factory regulations on workers with punishments for infringements - these are in fact the real CoCos that hamper genuine improvement in labour standards.

At the bidding of TNCs, trade unions and labour NGOs have been running the CoCo fool's errand for years.

Despite an unending smokescreen of corporate 'initiatives' which have at best failed to improve working conditions in general, it is plain to AMRC that the most practical and obvious area of activity which companies seem determined not to explore is to see if CoCos are effective when monitored and implemented by the workers themselves. This has been AMRC's recommendation right from the start of the CoCo debate.

It may be that TNCs now feel they have exhausted CoCos as a means to avoid democratic labour organisations, and are now moving towards even more vague, disputed, and unsubstantiated areas by spinning soundbytes like 'ethical trade', 'fair trade', 'sustainable development', and 'joint initiatives' to promote their anti-labour policies; watch this space.

Code of Conduct: What is that? A Code of Conduct (CoCo) is to help promote industrial standards of ethical business practice, describing how companies should behave towards workers. Some CoCos also refer to protecting the environment. Although inward investment can promote economic growth, a catalogue of scandals has shown that the drive for profit can also deprive people, especially the poor, of basic rights and decent working conditions. Capital rarely acts unless increased profits are likely. However some CoCos are barely concealed instruments of Human Resource Management (HRM), witnessed by typical HRM jargon (where ethics in the form of a CoCo "creates an asset"), enthusiasm for, 'business goals', 'global reputation', and 'responsible corporate citizenship' etc. For example the Hong Kong government's anti-corruption (ICAC) CoCo gushes "an effective Code of Conduct reduces costs and enhances profits…"

Development of Codes of Conduct Corporate Codes of Conduct (CoCo) have made big news in the last ten years. Internal CoCos were written, interpreted, implemented, and monitored privately by the companies themselves. This meant that the firms had complete control over them. However continued bad publicity about labour outrages combined with pressure from Western consumer lobby groups forced multinationals to develop institutions to deal more seriously with the issue. Weakness in labour organising allowed the companies to take the initiative. Instead of allowing workers to organise and elect representatives to negotiate with management, the corporate world developed CoCos along the lines of labour rights without active labour involvement. The emergence of sectoral and external CoCos such as Social Accountability 8000, the White House Apparel Industry Partnership, and the Ethical Trading Initiative signifies the institutionalisation of Codes. Despite this, ALU is still concerned with the same issues that implementation of CoCos posed in the first place; we are ever more certain that they cannot be effectively implemented without worker participation. From the beginning, ALU has argued that workers must be involved in both designing CoCos and monitoring implementation in their own workplaces. However workers are still ignored at virtually all stages of the process, and those parts where they must be consulted is largely for appearances' sake.