Unilever supply chain problems
A new report from campaign group Oxfam has revealed evidence of poor labour practices in food giant Unilever's operations in Vietnam between 2011 and 2012.
The in-depth review by Oxfam of one of Unilever's Vietnam factories showed that:
- Wages were insufficient to make savings or support dependants, with instances of workers unable to eat adequate diets or afford to keep children in school.
- Suppliers and managers unclear about Unilever's codes of conduct, in some cases only accessible in English.
- Workers were too scared to voice grievances or engage in freedom of association.
- Factory workers employed by a third party were on much poorer terms and conditions.
- Suppliers with employees working illegal overtime hours.
Oxfam researchers were given access to the factory at Cu Chi, near Ho Chi Minh city, where 700 workers were directly employed by Unilever and 800 more were employed by Thang Loi, a third party labour provider.
Managers and workers were interviewed on site and off site; 48 suppliers were also interviewed, with three selected for in-depth research.
The results, published with the approval of Unilever, showed the company fell short of the standards it set for itself.
Although the study found that wages paid by Unilever were in excess of the national minimum wage (approximately £45 per month in 2011) and the international poverty line of $2 (£1.20) per day, wages still did not meet the basic needs of employees and their families.
The minimum wage itself, said the report, "lags behind a rapidly-rising cost of living ... meeting only 40% to 46% of workers' minimum expenses per month."
Of workers in the Cu Chi factory, 80% said they needed another source of income to feed their families. One worker recounted having to take two of her three children out of school to work as a consequence of inadequate pay.
The report also found that while labour issues could be dealt with by a grievance hotline or the trade union neither were used nor trusted.
There is only one state-run trade union in Vietnam, and it is dominated by senior managers. Similarly, the workers feared that the grievance hotline would simply go straight to the management and put their job at risk. "We dare not raise our voice through the union leaders because they are paid by the company, they are the company's people," said one worker.
Conditions for those employed temporarily, by a third party, or by suppliers, were even worse. Globally, the number of people directly employed by Unilever decreased by nearly a half (45%) from 295,000 employees to 164,000 between 2000 and 2009. However, the report states: "The work of 131,000 people did not disappear. According to Unilever, in 2009 this work was being done instead by 86,000 people that were outsourced and/or under temporary contracts."
In the Cu Chi factory, 748 of the 1,539 workers (53%) were employed by a third party, Thang Loi – mostly migrants living in rented accommodation, paid just above minimum wage (only with cash benefits and overtime did this rise above the local average urban income).
Among suppliers outside the factory, 20 of the 48 interviewed said Unilever's supplier code (which requires at a bare minimum an adherence to local laws) had never been mentioned. At one supplier, employees worked four hours' overtime a day, six days a week, for 10 months: well in excess of a legal national limit of 200 hours a year. Another said that offering excessive overtime gave it a competitive advantage.
Unilever said it was disappointed by the outcome of the Oxfam report and the problems stem from the assumption that regional operations would follow its global CSR standards. It stated that it would work with its factory in Vietnam to change the way it works.
However, it was pointed out that Vietnam was just one case study and that the company had a presence in over 100 countries, directly employing 171,000 employees. Nearly 55% of its business was in emerging markets.
Unilever stated that it would welcome Oxfam back to the factory in two years time to assess improvements made.
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