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COMPLIANCE

Compliance pays off for RMG exporter

On the rounds with H&M's inspector

Star Business Report
Neclanjana Khan walks up the aisles in the huge factory hall in Gazipur, carefully peering at the faces of men and women who are busy cutting and sewing denim cloth for children's and men's blue jeans. She is looking for child workers. "I check if anyone looks younger than 18",sheexplains.
The 3500 workers factory, Columbia Apparels Ltd, claims not to employ underage employees. But Neclanjana doesn't just believe what she is told. She verifies. And if in doubt she asks for proof.
As she turns around the corner to climb to the fourth floor, a security guard pounds his left foot on the ground and salutes. The power of Neelanjana Khan can make a company owner jitter. She is working as a compliance auditor for Hennes & Mauritz (H&M), one of the biggest buyers in Bangladesh.
The Swedish company sells its cheap but chic clothing in 28 countries and runs flagship stores on world famous shopping streets such as Fifth Avenue in New York. It employs more than 60,000 people worldwide and accounted last year revenues of 80.1 billion Swedish Crowns (Tk85161 cr).
On the fourth floor the auditor inspects the medical unit where she finds a female worker resting on a bed. Although trying a smile, her face shows her pain because she squeezed her hand in a machine. Dr. Ayeesha Tabassuma, Chief Medical Consultant, takes care of her. Posters on the wall use pictures to give step by step instructions about health precautions such as the use of protection masks at work, of mosquito nets at night and the advantage of proper food. “There are lots of cheap vegetables on the market, but the people eat just rice and ruti and suffer,” the doctor says.
The auditor asks for the medical files. Last month, 839 workers visited the clinic, 15 accidents occurred. A nod. The accident rate is okay and consists of only minor cases such as needle bites or small cuts. “A high number of accidents is an alarming signal indicating that
safety installations do not work properly or are not consistently used”, Neelanjana Khan says. This kind of findings would be mentioned in the audit report that gives a company an accurate time frame to install prevention measures.
Are there enough fire extinguishers? Emergency lights on staircases? Smoke detectors? Filtered drinking water? Okay temperatures in working rooms? Steel mesh gloves used at cutting machines? Complaint boxes? First aid kits and a sufficient number of trained staff? A full audit of a company contains more than 300 items, takes up to six days and is usually conducted every second year.
Neelanjana Khan's work is vital for H&M. Forced or child labor, breach of minimal wages, of safety or environmental requirements bear a significant reputation risk for a global clothing company. Consumers in western countries are sensitive to the issues, and revelations of poor practice have prompted several consumer boycotts of certain labels in the past. That is why the US clothing company GAP immediately canceled a contract with an Indian supplier after media reported child labour in its factory some monthsago.
Many big western clothing companies introduced minimum standards for suppliers. H&M published its first Code of Conduct ten years ago and subsequently began conducting factory audits. Whoever doesn't match the requirements cannot become a supplier or loses a contract. During 2007 H&M stopped cooperation with eight suppliers in Bangladesh due to non-compliance with the Code of Conduct.
The company sees the code not only as a strict demand but also as a tool that encourages its suppliers to improve conditions in many areas. "Everyone benefits from development and good conditions in the factories: The employees, the suppliers, as well as us as a buyer”, says Sofie Nordstrom, the company's information coordinator Asia.
H&M employs eight COC
compliance auditors in Bangladesh. In 2007, the company carried out over 370 audits in the country, two thirds of them were unannounced. "Upon arrival we often go right away up to the workers in order to find unal-
tered everyday's conditions", Khan says.
Permanent mistrust? “No, it's not like police and thief, we rather work as a team, H&M also shares its experience with us”, replies Munir Ahmed, Director of M&J Group, which
owns Columbia Apparels Ltd.
He wouldn't call the Code of Conduct a burden: "It pays off. If the factory is clean and properly equipped and the workers are healthy and motivated, our quality improves and our work becomes more efficient", he says, adding that the fluctuation rate sunk to some five percent. According to him skilled workers who are tuned with the factory and know the requirements of the main customers H&M and GAP stay with the company, what’s also increasing productivity.
Value added services boost the business as well. Thanks to compliance with new waste water requirements M&J-Group now gets orders for
different kinds of denim washing to supply the different kind of prewashed jeans which have become fashionable over the years. "By improving our -quality we get higher margin orders and were able to take a good chunk from Turkey", Ahmed says.
Independent research confirms that a company can improve productivity if it fixes reasonable working hours, provides adequate working space with ample light, suitable temperature and clean, silent break facilities and if it pays attention to safety or provides medical benefits. One of the major issues for garment workers though is still timely and accurate wages.
Back in November, two days before Eid-ul-Azha, workers of a nearby garment factory protested on the streets against underpayment and delayed salary. Apparently the new minimum salary for unskilled garment workers, raised by the Government of Bangladesh from Tk 930 to Tk 1662.50 in October 2006, is not met everywhere. Concrete data is not available, but industry sources estimate that up to 30 percent of the workers are paid below the minimum.
“We exceed this requirement and pay untrained helpers at least Tk 1870", claims Munir Ahmed. Neelanjana Khan double checks that statement. She goes through the salary sheets of the last six months, piled up for her on a big table in a meeting room together with time records, worker's personal files, leave registers, medical facts, environmental certificates and internal policies summing. And she singles out some workers for a private talk without management to verify and double check the provided information. A full audit requires at least twenty worker interview’s.
"We cannot guarantee that there are no flaws anywhere in the supply chain”, says Sofie Nordstrom, "but H&M is committed to taking responsibility for our products, for the people making them as well as for the environment, and if problems are found we do our best to solve them.”