Are Western Consumers Willing to Pay More for Apparel?

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June 14, 2012
PBS Newshour (US Public Broadcasting System)

SUMMARY:

Fred de Sam Lazaro reports on the working conditions in Cambodia's garment industry, which exports much its clothing to the United States.

JUDY WOODRUFF: Next, labor unrest in Cambodia's clothing factories. Workers are calling for fewer hours, better conditions and higher wages. That raises a question: Are Western consumers ready to pay more for apparel?

FRED DE SAM LAZARO: Back in the 1990s, Cambodia, impoverished and rebuilding after its genocidal Khmer Rouge years, took steps to give its new garment industry a competitive leg up. It agreed to a system of labor standards, with minimum wages and a limit on working hours, union representation and freedom of expression.

All would be open to international inspection. Today, there are perhaps 400,000 garment workers in more than 300 factories in and near the capital, Phnom Penh, subcontractors to retailers and brands across Europe and North America.

Beginning from scratch less than two decades ago, Cambodia's garment industry has grown into the largest export earner for this country. Three out of four dollars that come into Cambodia come from the garment factories.

The key question is how much all this has benefited workers, almost all of whom are female, or, if you listen to the unions, whether it has benefited them at all.

Many factories have been plagued by labor unrest. Occasionally, it has been violent. There have been frequent reports of workers fainting on the factory floors.

Union leader Chea Mony blames unhealthy conditions and workers weak from malnourishment.

CHEA MONY, trade union leader (through translator): Workers have very low salaries, only 61 U.S. dollars per month. You couldn't afford to live on that day to day. There's no insurance if they get sick, no retirement benefit.

FRED DE SAM LAZARO: Chey introduced us to these workers. Like most of their colleagues, they are young rural migrants living in tight shared quarters, supporting extended families back home.

SOY NAKRY, garment worker: We have to pay for the room, electricity, water.

VONG SOPHAL, garment worker (through translator): In the evening, we just buy some fish and make some soup. Sometimes, we have to keep part of it for breakfast.

FRED DE SAM LAZARO: Chem Savet supports a farm family in a rural province 60 miles away, including her husband, her parents, and 2-year-old daughter.

CHEM SAVET, garment worker (through translator): I can only see her once a month. When I go home she really misses me, so she hugs me, especially when I must leave one day later. One time, she put some of her clothes in when I was packing. She wanted to come with me.

FRED DE SAM LAZARO: The standard six-day/48-hour week plus overtime leaves little time to travel and see family. Factory managers aren't sympathetic during family emergencies, they complained, and many workers are on temporary, instead of permanent contracts.

GARMENT WORKER (through translator): Previously, we saw a lot of strikes, but those haven't happened recently in our factory because there are a lot of newcomers.

MAN (through translator): They are like legal slaves.

FRED DE SAM LAZARO: Ken Loo, who represents Cambodia's garment factory owners, sees a very different reality.

KEN LOO, Cambodia garment manufacturing association: They're not whipped, you know. They're not chained. They come to work willingly.

FRED DE SAM LAZARO: He says garment workers are on average paid much more than the $61 minimum wage, closer to $90 a month, higher with overtime. That's more than policemen, teachers or most civil servants, he notes.

KEN LOO: We have to put things in context. The per capita GDP of Cambodia for last year as announced by the World Bank was $908. So, the average garment common factory worker earns 40 percent more than national per capita GDP. If you use that as a gauge, I think any worker in America would be glad to get 40 percent more than national per capita GDP.

FRED DE SAM LAZARO: Cambodia's minister of commerce says factory owners have little wiggle room because they are no more than contract tailors.

CHAM PRASIDH, Cambodian minister of commerce: They do not own the fabric. They do not own the brand. They just import the fabric, cut, sew, pack, and then sell.

FRED DE SAM LAZARO: Cham Prasidh could impose higher wages in the factories, most of them owned by investors from China, Taiwan, Korea and Malaysia. But he said that would be suicidal.

CHAM PRASIDH: There is a lot of demonstration to ask for living condition, ask to increase the minimum wage, and what happen? The investor just packed their sewing machine, and they go home.

FRED DE SAM LAZARO: Or they go to another country?

CHAM PRASIDH: They go to another country so we have to compare that, our price with Bangladesh. We have to compare our price with Pakistan or India, you know, or even with China.

FRED DE SAM LAZARO: San Francisco-based Gap is the largest buyer of garments made in Cambodia. It also buys from dozens of other developing nations.

Spokeswoman Bobbi Silten says Gap, which owns the Old Navy and Banana Republic chains as well, has no plans to leave Cambodia.

BOBBI SILTEN, Gap Foundation: We have very longstanding relationships with many of the vendors in Cambodia. It's been one of our top 10 sourcing countries for the last ten years. So we are very committed to being there, and we think that the labor standards that they have put in place is one of the reasons why we continue to stay.

FRED DE SAM LAZARO: Ken Loo is not reassured. In 2008, when the global recession began, he says buyers, including Gap, cut back in Cambodia, forcing many factories to close. At the same time, he says Bangladesh, with lower wages and no agreement to comply with labor standards, saw an increase in business.

KEN LOO: It just confirms our knowledge that, indeed, compliance of labor standards is the icing on the cake. Price is the cake.

CHAM PRASIDH: It is a bottom -- a race to the bottom. And Cambodia, to survive, we have to create something special.

FRED DE SAM LAZARO: Jill Tucker says Cambodia does have a special competitive advantage since buyers want to be associated with ethical labor standards. Tucker heads an agency supported by the U.N. and the U.S. government that conducts factory inspections for compliance with the labor standards.

JILL TUCKER, Better Factories Initiative: In the olden days -- by that, I mean maybe 10 years ago -- it was more of a cat-and-mouse game than it is now. And the really smart producers, I think, realize that, you know, you need to treat your workers well to retain your workers, and that it's just not worth it to not treat your workers well.

FRED DE SAM LAZARO: She cites this factory, run by a Taiwan-based company called QMI, as an example. There's plenty of air and light and relatively good labor relations. All 10,000 of QMI's workers are on permanent contracts, and wages range from $90 to as high as $150 a month.

That's well above the industry norm, but still below what unions say is adequate, given the rising cost of living, especially food.

But Tucker says demands for more pay, however justified, are a tough sell given realities in the U.S., the biggest market.

JILL TUCKER: I really wonder if American consumers are willing to pay significantly more for their apparel.

FRED DE SAM LAZARO: Really?

JILL TUCKER: Yes. I -- the cost of apparel has only dropped over the past decade. None of us are paying more for our garments than we were 10 years ago.

BOBBI SILTEN: We do need to think about what consumers are willing to pay, where we can source these goods to achieve the -- you know, get the math to work for everyone. From a macro standpoint, I think it's a very complex issue.

FRED DE SAM LAZARO: Gap's Silten isn't sure if consumers would pay more for ethically produced garments. And retailers, pressured by investors, aren't likely to ask them to do so, says David Schilling. He's with the New York-based Interfaith Center on Corporate Responsibility.

DAVID SCHILLING, Interfaith Center on Corporate Responsibility: The companies are being evaluated every single day. And Wall Street is very much a part of that very, very short-term calculus. That needs to be broadened.

FRED DE SAM LAZARO: Schilling says consumer awareness campaigns have begun to bring results on environmental issues and this will be broadened to include social issues, like the plight of workers.

DAVID SCHILLING: There's more and more advertising around, you know, sort of ecologically sound products. I think, more and more, that's going to happen within the social space as well.

FRED DE SAM LAZARO: He says that couldn't happen fast enough for workers in Cambodia and even more so those in many more countries that have not committed to international labor standards.

JUDY WOODRUFF: Fred's reporting is a partnership with the Under-Told Stories Project at Saint Mary's University in Minnesota.