Chains of production, ladders of protection: social protection for workers in the informal economy

CHAINS OF PRODUCTION, LADDERS OF PROTECTION I DS C H A IN S O F PRO D UC TIO N , LA D D ERS O F PRO TEC TIO N SO CIA L PROTECTION FOR W O RKERS IN THE INFORMA L ECO N O M Y edited by Francie Lund and Jillian Nicholson CONTENTS Preface 9 Introduction: A new approach to social protection 13 T h e process of globalization a n d its i m p a c t o n the informal economy and o n social protection 13 T h e informal economy 14 Approaches to social protection 16 Using value chain analysis to u n d e r s t a n d the dynamics a n d possibilities of social protection 18 T h e sectoral studies 20 Social protection for informal workers in the horticulture industry 23 T h e horticulture value chain The horticulture sector in the global economy The horticulture value chain in Chile and South Africa 25 25 26 Employment a n d the employment relationship in the value chain Productive activities and employment across the horticulture value chain Characteristics of workers in horticulture The employment relationship 28 28 32 34 ieneral a n d specific risks associated with horticulture The risks affecting informal workers in horticulture Social protection for informal workers — a social responsibility analysis 40 40 45 Lessons a n d policy implications 1. Incorporating informal workers fully under existing labor legislation 2. Extending coverage of public programs for informal workers in horticulture 3. Developing social protection linkages 4. Involving public and private participants in social protection 5. Empowering informal workers 52 52 52 54 54 54 Conclusion a n d further research 56 Social protection for informal workers in the garment industry 59 PA RT 1: INTRODUCTION 60 A n overview of t h e industry within the global e c o n o m y Value chains in the industry Homeworkers and other informal workers in garment value chains The garment industry in Thailand and the Philippines The regulatory environment in Thailand and the Philippines 61 61 62 63 66 PA RT 2 : T H E PHILIPPINES SO CIA L PRO TECTIO N STUD Y 70 Social p r o t e c t i o n for formal a n d informal workers in the Philippines 70 First case study: Large-scale factory p r o d u c t i o n for export This value chain in focus Protection for formal workers Agency workers: no formal protection Subcontracted workers: a few are luckier than most 72 72 75 75 76 S e c o n d case study: H o m e - b a s e d embroidery for export The value chain in focus Workers doing straight sewing: formal protection as a minority choice Social protection actions and recommendations: PATAMABA 78 78 80 81 Summarizing t h e implications of these case studies 83 PA RT 3 : THA ILA N D SO CIA L PRO TECTIO N STUD Y 84 G o v e r n m e n t sponsored social p r o t e c t i o n 84 Informal access to social protection 86 First case study: Large-scale factory p r o d u c t i o n for export GFB The BVS Company and its agency workers 87 87 90 S e c o n d case study: H o m e - b a s e d p r o d u c t i o n for local a n d export markets The value chain Subcontracting to groups at the village level Subcontracting group: Makuejae sewing group (Anong's group) The Banthi subcontracting group 92 92 93 93 95 Summarizing t h e implications of these two case studies Formal workers Agency factory workers Homeworkers 97 97 97 99 PA RT 4 : CONCLUSIONS AND RECOMMENDA TIONS 102 T h e organization a n d representation of workers in t h e industry Recommendations 102 103 T h e social p r o t e c t i o n of workers in t h e industry Recommendations 104 106 ("(inclusion: Implications for policy, research and action ill M ainzyxwvutsrqponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA lessons l e a r n e d f r o m using a c o m p a r a t i v e m e t h o d o l o g y for t w o sectors 111 Sites for practical policy e n g a g e m e n t a n d p r o g r a m i n t e r v e n t i o n 117 R e c o m m e n d a t i o n s for f u r t h e r r e s e a r c h 119 References 123 Appendix 127 'IaMes Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8: lable 9: Fruit exports from Chile (1997—98) and South Africa (1998—99) Typology of employment in the horticulture value chain Estimates of employment in the horticulture/retailing value chain in selected countries, and share of temporary and female employment Panel A: Age of fruit workers (as % of sample in each country) Panel B: Marital status of fruit workers (as % of sample in each country) Locating permanent and temporary women in agriculture within the national income distribution in Chile Coverage of pension plans and contract of employment among agricultural workers in Chile in 1998 Benefits provided for the formal workers at GFB Typology of workers and their access to social protection Current problems, types of organization and representation, further needs and potential organizations 25 29 30 31 31 39 47 89 100 101 Ro.-.es Box Box Box Box 1: 2: 3; 4: Continuum of horticultural employment 35 Income poverty risks among temporary workers in agriculture in Chile 38 Low coverage of formal social protection programs in Chile 47 Extending health insurance tozyxwvutsrponmlkjihgfedcbaWTSPMLJIHGFEDCBA temporeras in Chile — a promising development? 53 Commissions set up to extend social protection to temporeras in Chile 55 The difficulties of enforcing labour laws 69 Different sites for policy intervention and influence 116 Box 5: Box 6: Box 7: H y ires Figure Figure Figure Figure Figure 1: 2: 3: 4: 5: Overview of global value chain for South African and Chilean deciduous fruit Large-scale garment production for export: Philippines Home-based embroidery for export: Philippines Large-scale lingerie production for export: Thailand Home-based production of jackets and women's clothing for middle level export markets in Europe 27 72 78 87 93 A CKN OW LEDGEMEN TS A n u m b e r of people contributed to the initiative that led to this book. We would like to t h a n k the teams from the ILO, W I E G O and the World Bank, as well as the case study researchers, all of w h o m participated in the Technical Consultative Workshop, and are n a m e d in t h e Appendix. For additional assistance we are grateful to Michelle B h u n n o o and Beatrice M a n n of the I L O and Maitreyi Das of the World Bank. T h e following people assisted with the horticulture study: Maria Teresa Alvarez, Gonzalo Faiabella, A n d r i e n e t t a Kritzinger, Julia Medel, Lucia Morales, Bronwyn Page-Shipp, Jaime Ruiz-Tagle, Teresita Salame and Jan Vorster. For their assistance with the garment study we t h a n k Voravidh Charoenlert, Jurgette Honculada, Josephine Parilla, Bhawana Phathanasri, Somsak Plaiyoowongse, P h a n W a n n a b o r i b o o n a n d the leaders and members of P A T A M A B A A n g o n o chapter. PREFA CE This book is the o u t c o m e of a collaborative process of learning b e t w e e n t h e Social Security Division of t h e I n t e r n a t i o n a l Labor Office (the ILO), t h e Social P r o t e c t i o n Division of t h e World Bank, a n d W o m e n in Informal E m p l o y m e n t : Globalizing a n d Organizing ( W I E G O ) . E a c h of these organizations is c o n c e r n e d a b o u t social security and st icial protection, t h o u g h in different ways. T h e ILO has, for t h e course of t h e last century, shaped m u c h of t h e discourse about, and international s t a n d a r d s for, work-related social security. Its m a i n focus has b e e n on the position of people w h o are formally employed, a l t h o u g h it has m o r e recently broadened its concerns to include t h e position of informal workers as well. T h e World Rank lias recently placed social p r o t e c t i o n firmly o n its agenda, w h e r e it sits alongside the new focus o n poverty r e d u c t i o n . A n i m p o r t a n t aspect of t h e n e w a p p r o a c h is t h e development of participatory Poverty R e d u c t i o n Strategy Papers (PRSPs). W I E G O , an international n e t w o r k of researchers a n d grassroots organizations of informal workers, is c o n c e r n e d w i t h p r o m o t i n g t h e working conditions of people, especially poorer w o m e n , w h o work informally. O n e of W I E G O ' s core programs is social protection. All three organizations share a growing c o n c e r n w i t h t h e working poor — w i t h people w h o work all their lives, yet r e m a i n poor. All three organizations share a concern t h a t increasing n u m b e r s of people, worldwide, are losing access to measures of social protection, while t h e n e e d for basic i n c o m e a n d social security is p a r a m o u n t . I here are, however, i m p o r t a n t n u a n c e s in t h e definition of social p r o t e c t i o n used by different institutions. The World B a n k defines social p r o t e c t i o n as consisting of public i n t e r v e n t i o n s 'to assist individuals, households a n d c o m m u n i t i e s in b e t t e r m a n a g i n g i n c o m e risks' (Hoi : m a n n a n d Jorgensen 2001). T h e risk m a n a g e m e n t f r a m e w o r k includes a number of public i n t e r v e n t i o n s s u c h as sound m a c r o e c o n o m i c policy, good governance and access to basic e d u c a t i o n a n d h e a l t h care — all of w h i c h help to r e d u c e or mitigate risk, a n d h e n c e vulnerability. A t t h e same time, it is designed to e n c o u r a g e poorer people to engage in higher risk activities t h a t offer potential for higher r e t u r n . 1 h e l l . O , o n t h e o t h e r h a n d , sees social p r o t e c t i o n defined by basic rights. It is defined by ' e n t i t l e m e n t to benefits t h a t society provides to individuals a n d households • through public a n d collective measures — to protect against low or declining living --tandards arising o u t of a n u m b e r of basic risks a n d needs' (von Ginneken 2000). It has been active in p r o m o t i n g social insurance, a n d has traditionally looked towards promoting contributions for social insurance from governments, employers and organized labour. T h r o u g h the S T E P program (Strategies and Tools against Social Exclusion and Poverty) it is promoting decentralized social protection schemes, and is interested in experimenting with new ways of establishing linkages between these schemes, social insurance and other interventions. W I E G O ' s approach to social protection focuses o n informal workers, and applies a gendered risk analysis to explore their needs for social protection. It suggests that the specific needs of informal workers are missing in many formulations of poverty reduction and of social protection. It seeks to find out where people are trying to work, and how to reduce risks attached to the work that they do. O n e of its central principles is t h a t there is a role in such a study for multiple institutions and interest groups — government, the private sector, organizations of formal and informal workers, individuals and civil society organizations such as N G O s and C B O s (Lund and Srinivas 1999). In a series of meetings, the three organizations decided to try a n innovative approach to social protection that would be based on an understanding of the working lives of people in global value chains. Two studies were commissioned which allowed for the comparative analysis of two sectors in two countries. T h e study of the horticulture industry in Chile and S o u t h Africa was undertaken by A r m a n d o Barrientos of the Institute for Public and Development Management, Manchester University, and Stephanie Ware Barrientos of the Institute of Development Studies at Sussex (Barrientos and Ware Barrientos 2002). T h e study of the garment industry in T h a i l a n d and the Philippines was commissioned through H o m e N e t Thailand, and undertaken by D o n n a Doane, an independent consultant in Manila, Rosalinda O f r e n e o of the University of the Philippines and Daonoi Srikajon of H o m e N e t Thailand. A two-day workshop was held with the researchers in O c t o b e r 2001, during which the methodology for the research was refined. T h e resulting studies constituted the empirical core of a three day retreat (a Technical Consultative Workshop) in April 2002, which was attended by a small team from each of the ILO, the World Bank and W I E G O , as well as the researchers (see Appendix for a list of participants). T h e concrete situation of workers in the two industries was used to reflect o n the respective frameworks of the three organizations. T h e r e was enthusiastic agreement at the retreat that the studies, and the lessons learned from using this global value chain approach, should be more widely shared and disseminated. This book is the outcome of that decision. T h e inivudu. i '.on gives the rationale for this n e w c o n c e p t u a l framework, in w h i c h jnuilvsis ol .v - lal p r o t e c t i o n is integrated i n t o value c h a i n analysis. T h e two edited studies o n the garment a n d horticulture sectors c o n t a i n the r e c o m m e n d a t i o n s of the authors. T h e conclusion offers a n assessment of the lessons t h a t were learned through iMn" this methodology, .drawing f r o m the discussion at t h e workshop. It suggests sites for practical policy a n d program intervention, a n d identifies areas for further p u k \ oriented research. It draws o n c o n t r i b u t i o n s m a d e by o t h e r organizations (notably by H o m e N e t T h a i l a n d a n d S E W A ) at the workshop at w h i c h t h e studies were presented. IN TRO DUCTIO N A NEW A PPROA CH TO SOCIA L PROTECTION This .-.i-ci i< in sets the b a c k g r o u n d to t h e two studies t h a t follow a n d describes the approach that was used in the studies, namely the use of value c h a i n analysis as a basis for understanding social p r o t e c t i o n in t h e informal economy. It i n t r o d u c e s t h e two sector- t h a t were c h o s e n for t h e studies t h a t follow a n d explains why they were chosen. The pn icess of globalization and its impact on the informal economy and on social protection It is generally accepted that, at best, only o n e in five of t h e world's p o p u l a t i o n has adequate social security coverage. T h o s e w i t h o u t coverage t e n d to work in t h e informal economy, and are disproportionately f o u n d in the developing world. I n industrialized countries as well, however, there is decreasing social security coverage, a n d this is associated with d e m o g r a p h i c changes, a n d c h a n g e s in t h e n a t u r e of work t h a t h a v e accompanied globalization. Globalizat ion, u n d e r s t o o d broadly as t h e policy a n d technological c h a n g e s t h a t h a v e significant ly altered i n t e r n a t i o n a l e c o n o m i c relationships, has b e e n a c c o m p a n i e d by important changes in the n a t u r e of work, a n d in workers' access to social protection. Glohiilb, tion is associated w i t h t h e informatization of existing e m p l o y m e n t relations, and witli I he generation of e m p l o y m e n t t h a t is o f t e n flexible, precarious a n d insecure. zyxwvutsrponmlkjihgfedcbaWTSPMLJIHGFEDCBA W hile t| lere has b e e n a n increase in female participation in paid work, t h e r e has been, at the same time, a decline in t h e n u m b e r of workers — m e n a n d w o m e n — who are able t o access social p r o t e c t i o n t h r o u g h their places of work. I he horticulture industry is a good example of this. Globalization has facilitated t h e uipid movement of fresh perishable products, across large distances, to m e e t consumer demands for the year-round provision of staple a n d exotic fruit a n d vegetables. Horticulture thus reflects t h e m a n y a d v a n c e s m a d e t h r o u g h globalization, as well as the risks for those operating w i t h i n global export markets. T h e liberalization of trade and increased competition b e t w e e n exporters of horticultural p r o d u c e leave exporters moie exposed to volatility in supply a n d d e m a n d . A t a micro level, m a n y of these lisks uc transferred to workers, w h i c h is reflected in the widespread use of informal einplovmei i t Social protection has also been affected by globalization. Employers have to adjust to a more sharply competitive environment, labor organizations have weakened and state provision has been reduced with greater emphasis o n private sector provision. More people need social protection but, at the same time, many governments have decided to limit their social spending. Too many of the debates around the provision of social protection have argued in 'either-or' terms: that either the private sector should be the m a i n provider, or the government, or individuals themselves. A better way of framing the debate is to consider how to develop social protection in ways that can harness the contribution of all potential stakeholders so as to improve support for the increasing numbers of informal workers linked to the global economy. T h e informal economy Employment in the informal economy has risen rapidly in all regions of the world. Even before the recent financial crisis that originated in Asia and spread to other regions, and during which numbers of retrenched formal workers found work in the informal economy, informal workers in the non-agricultural workforce ranged from 60 percent in Latin America to 45-85 percent in different parts of Asia to 75 percent in Africa (ILO 2002b). T h e r e have also been changes in the places where people work: the conventional picture of 'shops, offices and factories' now vies with a picture that acknowledges that, for many (especially poorer people), work is now done in traditionally 'public' places, such as streets, sidewalks and stations. T h e private home has also commonly come to be used as a place of work, a n d the garment sector is a n obvious example of this. McCormick and Schmitz (2002:40) cite research that shows how widespread homeworking is in many countries: • I n Venezuela, 45 percent of clothing industry workers are homeworkers • In Thailand, 38 percent of clothing industry workers are homeworkers • In Chile, an estimated 60 percent of all women's and children's clothing is produced by homeworkers • In the Australian garment industry, there are 15 homeworkers for every factory worker. H o m e w o r k is an especially important source of work for women (Chen, Sebstad and O ' C o n n e l l 1999). A not e >•• ie broader approach t o t h e inf orm al eco n o m y The labour market has been changing so rapidly that the 1993 ILO definition of the 'informal sector' has been gradually overtaken by a broader concept of 'the informal economy' (ILO 2002a, ILO 2002b). In this new approach the informal economy comprises informal employment (withoutzyxwvutsrponmlkjihgfedcbaWTSPMLJIHGFEDCBA secure contracts, worker benefits, or social protection) of two kinds: • Self-employment in i n f o r m a l e n t e r p r i s e s (small unregistered or u n i n c o r p o r a t e d enterprises) including: employers, own account operators and unpaid family workers in informal enterprises. • Paid employment in informal jobs (for informal enterprises, formal enterprises, households, or no fixed employer) including: casual or day laborers, industrial outworkers, unregistered or undeclared workers, contract workers and unprotected temporary and part-time workers. Historically, whenever social policies or programs have been targeted at those in the informal economy, this has been done in isolation from formal economy workers. T h e links between the informal and formal economies have received relatively little attention in economic policies and planning. This book uses an expanded conceptual framework of the informal economy that draws attention to these links. Informal and formal work is perceived as part of one c o n t i n u u m of economic relations with direct links to one another. Production, distribution and employment relations for b o t h informal and formal work are part of this continuum, with regulated and protected work towards one end and unregulated and unprotected work towards the other. There are many examples of this dynamic link between the informal and formal parts of the economy. For instance, informal enterprises may have production or distribution relations with formal enterprises — such as supplying inputs, finished goods or services through direct transactions or subcontracting arrangements. Formal enterprises frequently hire wage-workers under informal employment relations — for example, many part-time, temporary and industrial workers work for formal enterprises through contracting or subcontracting arrangements. T h e expansion of the informal end of the economic c o n t i n u u m has led to a widening of the income gap, especially for women. Incomes of b o t h m e n and w o m e n are lower in the informal economy, and the gender gap in income appears higher here t h a n in the formal economy. W i t h i n the informal economy incomes tend to decline from selfemployed to casual wage-worker to subcontracted worker. Women, worldwide, are under-represented in high-income activities and over-represented in low-income activities. Understanding risk in the informal economy Poor workers in the informal economy face high risks. Firstly, they have a high exposure to risks given the conditions under which they live and work, and secondly, they tend to have low levels of income and are, therefore, less likely to be able to save for contingencies. This means that, for them, predictable financial needs — such as expenditures o n life cycle events and education — o f t e n become financial risks or, at least, a source of financial stress. Thirdly, they have little or n o access to formal means of managing risks, such as insurance, pensions and social assistance. T h e y also have little access to mortgages, loans and scholarships to help finance housing and education. Like those who work in the formal economy, workers in the informal economy face a c o m m o n set of core risks or contingencies — namely: illness, maternity, asset loss, disability, old age and death. However, as n o t e d above, they are less likely to be protected against such risks or able to manage these risks. Moreover, they face two sets of work-related risks: the majority neither enjoy job security nor worker benefits, nor are they covered by social legislation, and in addition they face specific risks associated b o t h with the industry or sector in which they are engaged a n d with their employment status within that sector. Clearly, informal workers, particularly the poor, have a strong need for effective instruments with which to address risk. Access to credit and savings serve as a n important means of self-insurance in the informal economy, along with informal group insurance instruments based o n risk pooling. However, these informal measures need to be strengthened and expanded, as well as complemented by state policies a n d provisions that help those in the informal economy manage their risks. Ideally, w h a t is needed are mechanisms t h a t help prevent risks occurring, or reduce the possibility of t h e m occurring, as opposed to the more commonly found coping strategies used by informal workers and their families, which are brought into play after the event. Approaches to social protection T h e term 'social security' has traditionally b e e n used to cover a range of forms of provision, from people making their own private savings for their retirement, with n o contribution from employers or government; to social insurance, where workers, employers and the state may e a c h make a contribution; to state assistance where people may receive a non-contributory grant in their old age or w h e n affected by a natural catastrophe. In tin.' la1-1 • - :ntury social security c a m e to be used, generally, to refer to formal scheme-, v. !.Lch cover the core contingencies of: • H e a l t h care • Incapacity for work d u e to illness • Disability t h r o u g h work • Unemployment • Maternity • Child m a i n t e n a n c e • Invalidity • Old urn- • Deal h < a breadwinner. In industrialized countries, access to these forms of social security h a s b e e n t h r o u g h a mixture oi contributions b e t w e e n workers themselves, employers a n d governments. 1 lie design of this formal security provision rests o n the a s s u m p t i o n t h a t a worker is in i recognizable a n d regulated e m p l o y m e n t relationship, a n d t h a t the worker will l-e in e m p l o y m e n t m o s t of t h e time. W o m e n a n d c h i l d r e n h a v e typically received ;u i oss to social protection t h r o u g h h u s b a n d s a n d fathers. I n a d d i t i o n to the above, 11 ie provision of free or partly free e d u c a t i o n a n d h e a l t h services is o f t e n part ot whin has come to be expected f r o m a welfare state. I he prt ivi'-i..zyxwvutsrponmlkjihgfedcbaWTSPMLJIHGFEDCBA as of social security h a v e shifted as industrial countries h a v e t u r n e d away from i omprehensive social security systems. Pension systems are less generous, sick leave i being c u t back, disability grants are m o r e difficult to access. T h i s is partly beca;i e t h e structure of t h e p o p u l a t i o n has changed, with m o r e older people requiring e - , tensive h e a l t h care, b u t it is also because t h e labor m a r k e t has c h a n g e d . Fewer people are working in jobs t h r o u g h w h i c h they c a n get social security benefits and which Mibsidize t h e m in their old age. T h e expansion of private sector provision of h e a l t h care, insurance, pensions a n d i n s u r a n c e of work-related injuries h a s meant that informal workers are largely bypassed as they do n o t or c a n n o t m a k e t h e requisite i ontributions to qualify for benefits. 1 he tenr. .cial protection' has o v e r t a k e n 'social security', especially in t h e c o n t e x t of less developed countries. It marks t h e switch away from c o m p r e h e n s i v e state ctivity to one where individuals, families a n d c o m m u n i t i e s h a v e a m o r e active role, wide ran»e of institutions a n d actors are involved in t h e p r o d u c t i o n of social protection, and the concept fits in better with the new paradigm in development theory emphasizing h u m a n and social development. It can focus o n expanding capabilities (what people can do) as the objective of policy interventions, as opposed to concern with only commodities (food security), or solely income (basic income support), or purely labor standards (basic rights). However, the decrease in the role of the state and of employers that accompanies this shift is problematic. A policy framework is needed that explicitly takes into account, and seeks to support, those t h a t participate in the informal economy, particularly the more impoverished and vulnerable. It needs to articulate a coherent and pragmatic approach towards assisting those in the informal economy to address risk and reduce poverty. Integrating a n analysis of social protection with value chain analysis provides the potential to advance analytical and strategic thinking about social protection in the changing world of work. Using value chain analysis to understand the dynamics and possibilities of social protection Value chain analysis (sometimes called commodity chain analysis or sub-sectoral analysis) can be used to develop a new policy framework. It focuses on a commodity that is being produced — for example, a cotton shirt — and looks at the entire chain of ownership and activities involved in production, from the land o n which the c o t t o n is sown and harvested, to the process through which the raw c o t t o n is taken off the land, milled, made into cloth, manufactured into a shirt and marketed. A t each point along this chain, there are people doing the work, in different work statuses, and there are people and agencies controlling the conditions under which the work is done. As Dolan and Humphrey (2000) point out, this is an approach that 'draws o n the simple idea that the design, production and marketing of products involves a chain of activities between different enterprises'. T h e s e different enterprises are linked through networks of governance, and Gereffi (1994) emphasizes t h a t these networks require cross-border co-ordination of activities. H e distinguishes between producer-driven chains and buyer-driven chains —- with the latter determining w h a t should be produced, b u t n o t doing the production themselves. T h e s e n o n manufacturing companies define trade opportunities for developing countries (Gereffi 1994; Dolan and H u m p h r e y 2000). Conventional value chain analysis was developed as a way of being able to u n d e r ' stand more precisely how different industries could be made more competitive. It has added to an u n d e r s t a n d i n g of t h e e c o n o m i c processes involved, t h e points at which value may be added a n d the conditions for b e t t e r c o - o p e r a t i o n b e t w e e n businesses. Kaplinsky (2000) reflects o n t h e 'dark side' of globalization, a n d its uncqualizing effects, a n d uses t h e value c h a i n a p p r o a c h to ask h o w participation in the global economy c a n take place in a way t h a t provides for sustainable a n d equitable income growth. This book presents the position t h a t t h e value c h a i n a p p r o a c h has t h e potential to ground the study of social p r o t e c t i o n in t h e real world of t h e working poor. It offers the opportunity to u n d e r s t a n d b e t t e r h o w workers at different points in t h e c h a i n of production may have different access to a 'ladder of protection'. C o n v e n t i o n a l value chain analysis can be b r o a d e n e d a n d e n r i c h e d to include w h a t may be called a 'labor benefit approach'. This approach has t h e following potential: • It can be used to identify h o w different statuses of e m p l o y m e n t (the different ways in w h i c h people are employed) m a k e workers vulnerable in different ways at diff erent points in t h e c h a i n of p r o d u c t i o n a n d distribution. • It can be used to identify t h e different ways in w h i c h m e n a n d w o m e n are able to participate in t h e labor market, the conditions u n d e r w h i c h they work, a n d their relative control over these conditions. • It allows for the risks a n d vulnerabilities of people w h o are economically active to be e x a m i n e d b o t h in t h e f o r m a l workplace a n d in informal workplaces, s u c h as people's h o m e s or informal c o m m u n i t y facilities. • It extends t h e idea of 'governance' beyond t h e study of g o v e r n a n c e w i t h i n a n d bet ween firms, and focuses o n h o w workers in different settings a n d in different empli iyment statuses are regulated in different ways, including regulation by local government, organizations of employers, a n d formal a n d informal organizations of workers, as well as by t h e n a t i o n a l a n d i n t e r n a t i o n a l regulation of labi )r standards. • It can help to identify t h e different rights a n d e n t i t l e m e n t s of specific groups of workers to social protection, b o t h t h r o u g h their e m p l o y m e n t a n d t h r o u g h wider piihlii provision. It also identifies deficits in these rights a n d e n t i t l e m e n t s . • A value c h a i n a p p r o a c h c a n also help to identify stakeholders linked to a particular sector, a n d give a perspective o n t h e role these different stakeholders can play in developing social protection. This approach has a singular advantage in that it mainstreams informal workers an J informal enterprises into the economic domain. Too often, informal workers and the informal sector of the economy are seen as a n urban or social planning issue, or as a health issue. T h r o u g h concentrating o n different working arrangements, it can include workers with and without formal contracts, people running their own tiny enterprises and people — including unpaid family members — working for others. Furthermore, through being specific about the conditions under which people work, it allows more accurate analysis of the possibilities of organizing and being represented. T h e main limitation of applying this chain analysis to social protection would appear to be that some working people do n o t fall easily into any sector or into any value chain. Those working in subsistence agriculture, for example, would n o t be included, whereas those working in a n d selling dairy products would be included. Also, some individuals work in more t h a n one job, and these may be in different chains at the same time, or in different chains at different times of the year. This book presents findings from studies that have attempted to apply value chain analysis to an institutional framework for social protection. It breaks new conceptual ground in foregrounding the importance of status of employment, and in showing how that status determines where people wh o work will stand o n the ladder of protection. T h e sectoral studies T h e studies reported o n here cover four countries and two sectors. T h e y encompass different regions and b o t h urban and rural economies, and they examine short, usually local, chains as well as long global chains. T h e studies are set in countries which have very different commitments to social protection, and in which trade unions have adopted very different stances towards informal workers and their organizations. In the horticulture study, the industry in Chile and in South Africa is compared, with a particular emphasis o n the growth of luxury fruit for export. T h a i l a n d and the Philippines are the countries chosen for an investigation of the garment industry. In e a c h country in the garment sector two different chains are explored. In tbe Philippines, the study looked at one chain involving the manufacture of massproduced clothes for export to the United States, as well as a chain involved in export-oriented embroidery of clothes. In Thailand, the first value chain studied of tht' large scale production, for export, of lingerie. T h e second was t h e production of clothing for local a n d foreign markets. T h e same workers were involved for both markets. Why the garment and horticulture sectors were chosen T h e garment sector involves millions of people worldwide, especially in Asia. It is one in which there has b e e n rapid informalization a n d c o n t r a c t i n g out. T h e sector has a high c o n c e n t r a t i o n of w o m e n , m a n y h o m e - b a s e d workers a n d also m a n y migrant workers. T h e r e is a wide range of consumers, f r o m very poor people buying very cheap (and second h a n d ) clothing, to elites w i t h an interest in h i g h - e n d fashion. T h e r e ha-; been considerable i n t e r n a t i o n a l pressure f r o m groups c o n c e r n e d with production and trade in this sector. Cross-country research has b e e n c o n ducted on garment c o m m o d i t y chains, t h o u g h n o t o n access t o social p r o t e c t i o n . Horticulture is, by contrast, a land-based sector. M a n y w o m e n are involved, a n d t h e choice of lion iculture as a sector enables t h e inclusion of b o t h rurally-based work, and the efkvi-; of seasonality as a risk. H o r t i c u l t u r e represents a significant share of exports for -oine countries, especially f r o m Latin A m e r i c a , a n d increasingly f r o m some African countries. Workers are c o n c e n t r a t e d in the areas of p r o d u c t i o n a n d packing (whii h makes a good c o m p a r i s o n with h o m e - b a s e d workers in clothing) and this offer- possibilities for exploring single-action leverage in provision of social benefits. T h e studies J o n o t follow t h e same format, b u t include the following m a j o r themes: • T h e n a t u r e of t h e c o m m o d i t y chain, w i t h t h e n u m b e r of workers, their employment stams, wage levels a n d a g e n d e r e d a n d life cycle analysis. • I lie plan - of t h e sector in t h e global e c o n o m y a n d t h e p a t t e r n s t h a t are emerging with regard to the c o n t r a c t i n g of work, a n d t h e informalization or formalization oi work. • I he general a n d specific risks associated w i t h t h e sector for workers at different position-, on t h e chain. • 1 he regulatory e n v i r o n m e n t , w h i c h includes t h e regulatory regime, t h e c o u n try's com m i t m e n t to legislation o n basic conditions of employment, including gender equity a n d the rights of minority groups. " ' ' K ' 1 > of different categories of workers to formal m e c h a n i s m s of social protection. T h e provision of social security and social protection in the country, including occupational health and safety provisions — for example, if there is a free h e a l t h service; if there are health services in rural areas where horticulture is practiced; if there are industrial health services; if there is state assistance for people with disabilities (whether disability is caused at or away from work), Informal and non-work related access to social protection, in particular any promising local, in-country examples of schemes and programs which have b e e n started independently of government or employers, and which would be accessible to horticultural/garment workers in vulnerable employment. T h e organization and representation of workers in the industry — the access of workers at different points o n the chain to mechanisms of representation and appeal. T h e potential future roles for different actors: a stakeholder analysis of governm e n t at national, provincial and local levels; the owners and controllers of the industry; the private insurance industry; organized labor; informal workers and their organizations; consumers; civil society organizations and ethical trade advocacy groups. SOCIA L PROTECTION FOR INFORMAL WORKERS IN THE HORTICULTURE INDUSTRY: CHILE & SO UTH A FRICA Research by A rm and o Barriento s & Step hanie W are Barriento s This section examines how to extend social protection to informal workers in horticulture. Globalization has important implications for social protection: with the integration of production in the South with markets in the N o r t h , greater opportunities are created, and also greater risks, for workers in the developing world. Horticulture is a very good example of this. T h e growing exports of fruit from developing countries, such as Chile or S o u t h Africa, to markets in the N o r t h creates a value chain between S o u t h e r n workers and producers and N o r t h e r n supermarkets with their workers and consumers. At b o t h ends of the chain the sector provides important income earning opportunities for workers, including women. However, a significant n u m b e r of jobs are temporary, precarious, low-paid and predominantly female. As horticulture expands, it is becoming associated with a growing informalization of work in global export sectors in b o t h developed a n d developing countries. T h e fruit export sectors of Chile and S o u t h Africa are compared. Both these countries have a well-established export trade in fresh fruit, which generates high levels of employment in the fruit growing regions, with some social protection mechanisms in place to protect workers. T h e study identifies the value chain links to the United Kingdom, where supermarkets dominate retailing, and where there are also high levels of informal employment. Key features of informal employment in horticulture are identified, and the study examines social risks faced by these workers and their households, before evaluating existing forms of social protection and identifying potential avenues for extending social protection among these workers. T H E H O IU IC U LX U RE V A LUE C H A IN The horticulture sector in the global economy Over tin.' last i'"W decades there has b e e n a rapid increase in t h e trade of fresh products, wliii I: c a n now be sourced f r o m a r o u n d the world. C e r t a i n developing countries willi ihe right climatic a n d p r o d u c t i o n conditions h a v e b e e n able to expand their horticultural exports. Examples of horticulture expansion are: • Between l u 8 5 and 1992 t h e g r o w t h rate in the p r o d u c t i o n of fruit, vegetables and tlowef- was 17.2 p e r c e n t per a n n u m in C e n t r a l A m e r i c a a n d 48 p e r c e n t perannuiii in S o u t h A m e r i c a (excluding Brazil). • In S u b - S a h a r a n Africa, horticultural exports have doubled since 1980, a n d in ]99(i i he1. • xceeded t h e region's exports for coffee, c o t t o n and all o t h e r individual commodities o t h e r t h a n cocoa. • World trade in edible horticultural products h a d a total value by 1988/9 of US $40.3 billion, exceeding the trade in cereals of U S $38.6 billion. T h e volume am I value of exports f r o m Chile a n d S o u t h Africa is given in Table 1. This expansion has b e e n stimulated by a n u m b e r of aspects of globalization, such as the adoptionzyxwvutsrponmlkjihgfedcbaWTSPMLJIHGFEDCBA < export-led g r o w t h in developing countries and t h e use of m o d e r n technology during the process of p r o d u c t i o n , post-harvest preparation, cooling, storage and ,: :,isport. A h i g h - t e c h 'cool chain' keeps fresh p r o d u c e in t e m p e r a t u r e controlled conditions, prolonging shelf life a n d e x t e n d i n g t h e export period of these perishable !>'«••!•• icts. T h i s facilitates the year r o u n d purchase of horticultural produce globally. W'hmiR of KKpoits (tons) Sout h Af rican deciduous f ruit Chilean t- rint Source: Barrientos, Value n}" Estimated % «;:porfc:; (USzyxwvutsrqponmlkjihgfedcbaWTSRQPOMIHFEDCBA Sniillioa";) exported i.n >:U 530 350 700 76 I 309 263 I 292 30 Dolan and Tallontice (2001). ±6 T h e horticulture value chain in Chile and South Africa Fresh produce was traditionally sold through a complex web of exporters, importers and wholesale markets, with long and often fragmented distribution chains. Increasingly, distribution channels are becoming more integrated in the global horticulture value chain. This is partly through the operation of large, multinational firms, such as Dole and Del Monte, t h a t are directly involved in all stages of the chain from production to the final point of distribution. It is also occurring through the establishment of coordinated supply networks, usually dominated by large buyers and involving many actors. These work with a small n u m b e r of importers and exporters in different countries to handle their year round requirements from across the world. Despite the increase in vertical integration and the role of d o m i n a n t buyers along the value chain, the supply base itself remains relatively fragmented and diverse. In Chile and S o u t h Africa production is characterized by medium sized c o m m e a i;il farms, with very few large-scale plantations or smallholders. Figure 1 outlines the fruit value chain from Chile and S o u t h Africa. Chile is the larger producer, b u t ships a smaller percentage of its fruit to Europe t h a n does S o u t h Africa. Both export homogeneous fruit varieties, particularly grapes, apples and pears, and once they reach their destination, there is little to differentiate the fruit o n a country basis. Co n su m er s I Su p er m ar k et s Mar k et s w h o l esal e ( U K 8 0 %) ( U K 2 0 %) Ap p r ox . 7 0 % t o Eu r op e k k flpprox . 3 0 % t o Eu r o p e Chile So u t h A f r i c a Exporters (± 1 2 '. :ge) Ex p or t er s (± 2 0 large) Co- operatives p o w e r s (2 0 0 0 ) Pr od u cer s (2 0 0 0 ) Permanent w o r k er ; ( 2 6 % f em ale) Per m an en t w o r k er s ( 5 % f em al e) Temporary/ season il wo r k er s ( 6 9 % f em ale) Tem p or ar y/ seasonal w o r k er s ( 5 2 % f em ale) Risks tozyxwvutsrqponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA p r e cers and workers Producers ;ne • v<'rating at t h e point of the value c h a i n w h e r e t h e risks f r o m agricultural producii. >:i are highest. T h e y are therefore subject to a volatile pricing system on the international markets. T h e y h a v e to m a k e significant i n v e s t m e n t s in m o d e r n technology :mJ new p r o d u c t i o n m e t h o d s to sustain the high quality d e m a n d e d in the global Inm i l.irket. 28 Moreover, production still remains subject to the vagaries of weather, pest or disease, and it is the producers who bear these risks, and who suffer the most w h e n adverse conditions prevail. They are often squeezed in their returns, and their portion of the value of the final price is relatively low compared to other sectors of the value chain. This is important to understand because the only group remaining at the base of the value chain, o n t o which they can offload some of the risk, is the labor force, and particularly the more flexible seasonal workers where the highest levels of female employment are found. EMPLOYMENT AND THE EMPLOYMENT RELA TIONSHIP IN THE VA LUE CHAIN Information about employment and employment relationships helps to uncover responsibility for working conditions, including the types of social protection. Productive activities and employment across the horticulture value chain A typology of employment in the value chain is presented in Table 2. At the production end, employment is concentrated within the growing and packing segments. Here, there is diversity and flexibility, w i t h a relatively low level of formal and a high level of informal female e m p l o y m e n t . O n c e the produce leaves t h e packhouse, it enters the 'cool chain' distribution funnel, which is highly capital intensive. T h e retail e n d of the c h a i n is m u c h m o r e labor intensive. H e r e again, high levels of informal female e m p l o y m e n t d o m i n a t e . Table 2:zyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA Typology of employment in t he horticulture value chain Type of firm Fact or Employment t ype int ensit y Superm arket s Labor Core p er m anent Female Tasks linked t o employment informal wor k High Shelf filling, staff, m aj or i t y part- check out , cou n t er s, t im e hours and shif t floor wor k Im port ers Cap it al Skilled labor n/ a n/ a Tr anspor t at ion Cap it al Skilled labor n/ a n/ a Ex port ers Cap it al Skilled labor n/ a n/ a Pack houses Labor Sm all p er m anent High Sort ing, grading, core, m aj or i t y semi- pack ing and relat ed skilled seasonal t asks labor Farms/ Packers Labor Sm all p er m anent High % in Sort ing, grading, core, m aj or i t y semi- packing, packing, t hinning, skilled seasonal and lower in pruning, pick ing and general labor f ieldwork relat ed t asks Sm all p er m anent Med i u m in Thinning, pruning, core, m aj or i t y semi- f ieldwork picking, and relat ed (incl. m igrant and con t r act ) Farms Labor skilled seasonal and general labor (incl. m igrant and con t r act ) n/ a = inf or m at ion not available t asks 3° Levels of employment Estimates of levels of employment in export horticulture are not very reliable. Most reliable estimates indicate that permanent employment forms only a small percentage of total employment, as shown in Table 3, and a large proportion of employment is temporary or seasonal. Horticultural employment is highly concentrated in the key producing regions in each country, with very little alternative work because workers are surrounded by wide tracks of farmland and few or no towns where other labor is in demand. This poses a particular problem for out of season income generation in those areas for the large, informal workforce. Tabl e 3: zyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA Estimates of employment in t he horticulture/ retailing value chain in selected countries, and share of temporary and female employment Em p loym ent Sout h Af rican deciduous fruit 283,000 % Fem ale 2 6 % perm anent % Tem porary 65- 75% 6 9 % t em porary Chilean fruit 336,700 5 % perm anent 5 3 % t em porary Sources: Kritzinger, Prozesky et al. (1995); Barrientos, McClenaghan et al. (1999); Barrientos, Dolan et al. (2001); de Klerk (date unknown). Female emp lo y ment levels FlexiblezyxwvutsrqponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA female employment helps to facilitate the functioning of both ends of the global value chain. Table 3 shows the significant level of female employment within the sector, with women particularly concentrated in temporary forms of employment. In Chile, for example, 53 percent of temporary workers but only five percent of permanent workers are female. In S o u t h Africa, 69 percent of temporary and casual workers b u t only 26 percent of p e r m a n e n t workers are female. This partly reflects the perception that women have 'nimble fingers' to do the delicate handling of the fruit required in packing. It also reflects employers' use of flexible female labor as a buffer against risks of variability in production or price. Tabl ezyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA 4: Panel A: Age of fruit workers (as % of sample in each country) Chile (1 ) So u t h Africa (2 ) M en Wo m e n M en Wo m e n 19 and under 34 17 3 5 20- 29 42 38 34 39 30- 39 13 30 30 36 40- 49 6 9 22 13 50 and over 5 6 II 6 A ge Panel B: Marital status of fruit workers (as % of sample in each country) Chile ( I ) Sou t h Af rica (2 ) Men Wo m e n M en Wo m e n Single 65 37 22 30 Married/ Cohabit ing 29 47 75 66 6 16 3 4 St at us Widowed/ Separ at ed Sources: (1) Rodriguez and Venegas (1991) based on a study of temporary workers only (excluding permanent workers) in 6 valleys in Regions III, V, Metropolitan, VI and VII. Sample size: 220 male and 238 female temporary workers. (2) Kritzinger, Prozeski and Vorster (1995) based on a sample of all deciduous fruit workers (permanent and temporary) in the Western and Northern Cape. Sample size: 353 male and 351 female workers. 32 Supermarkets that are the primary retail outlet for horticultural produce in the UK also have a high proportion of informal employment, largely female. In 1994 it was estimated that out of 100 000 supermarket workers in the UK, 75 percent were female (Penn and Worth 1993). Flexible female employment allows supermarkets to vary staffing levels to meet shopping peaks, and extend opening times up to 24 hours a day. Characteristics of workers in horticulture Gender and life cycle characteristics T h e age and life cycle profiles of horticultural workers vary according to country and status of work, depending on local social conditions and the supply and d e m a n d of labor. Case studies indicate that in South Africa and Chile, as in many other countries, the majority of both male and female horticultural workers are in their 20s and 30s with families. This is shown in Table 4. In Chile this age grouping accounts for 55 percent of male and 68 percent of female workers, and in South Africa for 64 percent of male and 75 percent of female workers. 33 In both countries there is a predominance of married or cohabiting workers, with the exception of male workers in Chile, 65 percent of w h o m are single. T h e figures for South Africa partly reflect the fact that m u c h on-farm labor was traditionally employed on a family basis, with male p e r m a n e n t workers obtaining employment o n condition that their spouses worked o n the farm w h e n required. In Chile most workers live off-farm, and are employed on an individual basis. Most fruit workers in b o t h countries have children and are working during their childbearing years. During the height of the season b o t h parents, plus other adult household members, are likely to be working long hours. Whilst there is some creche provision for young children in b o t h countries, there is rarely any provision for adolescents who are thus left alone. Migration characteristics: domestic and international It is known that migration is an important issue in many countries specializing in export horticulture, yet there has been very little research or information produced on this. In Chile and S o u t h Africa there is internal migration of different types. In Chile, fruit workers from the central regions migrate n o r t h (where there is a labor shortage) to work at the start of the season, before moving to work south in their own regions of residence. In South Africa, apartheid shaped a racial division between colored workers who were allowed to live o n farms in the Cape region, and migrant African workers (usually from the so-called self-governing states) who were only allowed to migrate during the season. Since the end of these restrictions, internal migration of African workers has continued, b u t they now also live in townships or communities within the fruit growing areas. T h e r e is some evidence that men are more likely to migrate t h a n women, although w o m e n also engage in migrant labor. In Chile there is little evidence of trans-border migrants working in export fruit. In South Africa there is some trans-border migration from other African countries, m u c h of which is illegal. T h e r e are important implications for social protection arising from this, relating to access to entitlements. These workers will have no social protection in the country in which they work, or in their home country, where their families' access to social protection is eroded because of the absence of the main breadwinner. The employment relationship T h e r e is a significant diversity in employment relationships within the horticulture sector, b o t h across and within locations. Reasons for this are the seasonal nature of work, the diversity and fragmentation of producers and employers, the volatility of o u t p u t due to natural conditions, and the attempts by producers to transfer risks to workers. Employment diversity and heterogeneity in horticulture reflects the continuum from formal to informal forms of working identified by Lund and Srinivas (2000) (see Box 1). T h e r e is n o consensus on categories to define types of work, and there is often a lack of clarity, particularly in the use of the terms 'temporary', 'seasonal' and 'casual'. Further, in many countries c o m m o n usage does n o t necessarily concur with legal definitions of the categories, which also vary between countries. Permanent workers and regular temporary or seasonal workers have stronger ties to one employer. Irregular casual and seasonal, migrant and contract workers have weaker ties to any particular employer. Flexibility of employment T h e r e is often a high level of flexibility of employment within the sector, with nonp e r m a n e n t workers moving from one employer to another during or between seasons. 35 /i Continuum of horticultural employment Formal zyxwvutsrqponmlkjihgfedcbaWTSRQPOMIHFEDCBA em p loym ent • Perm anent work (a sm all core usually w i t h cont ract s of em ploym ent ) • Regular t em porary or seasonal wor k (w i t h or wi t h o u t cont ract s of em ploym ent ) • Casual and irregular work for short periods of t he season or on a daily basis (w i t h or of t en w i t h o u t cont ract s) • Cont r act labor em ployed by a t hird part y labor cont ract or (of t en wi t h o u t cont ract s) >r • Migrant labor em ployed direct ly or t hrough a cont ract or (of t en wi t h ou t cont r act s) • Sm allholder product ion, oft en involving fam ily labor (paid or unpaid) Infor mal em p loym en t Research suggests t hat , out side count r y specific sm allholder product ion, t he com binat ions of inform al workers used vary, depending on: • The dist inct ion bet ween fieldwork (wher e cont ract and migrant workers are more oft en used) and packing (where higher skill requires a more st able seasonal workforce, of t en fem ale) • Firm size — independent and farm packhouses t end t o be larger em ployers t han farms w i t h no packing facilit ies • Local labor supply and dem and fact ors, especially at seasonal peaks • Part icular labor sourcing net work s t hat individual em ployers have links t o. Flexibility clearly results in part from seasonality, but it also reflects labor practices adopted by employers in order to reduce their contractual commitment to workers. This has a strong gender bias, with w o m e n being concentrated in more 'flexible' forms of work t h a n men. Contracts of employment are more c o m m o n amongst permanent workers. Studies showed that in Chile the likelihood of temporary workers having a contract depended on the size of the employer. Amongst large producers and export firms 70 percent of temporary workers had contracts, b u t this was only the case in 15 percent of the smaller producers (Venegas 1993). In S o u t h Africa 42 percent of workers had n o contract, and amongst those with contracts, on ly three percent possessed a written copy of a signed contract (Barrientos et al. 1999). Contract labor T h e case studies indicate that there has been a rapid expansion over recent years in the use of contract labor, where a contractor employs labor that is then provided on a third party basis to producers. T h e labor contractor is responsible for the employm e n t conditions and pay of the workers, removing this responsibility from the producers themselves. T h e use of contract labor reflects a further increase in the flexibilization of employment, and the vulnerability and insecurity of these workers is often greater than those in more stable forms of employment relationships. It also represents a challenge to the extension of social protection in the sector, as the employer (namely, the contractor) is more difficult to trace or monitor than a more stationary producer or exporter. T h e increasing use of contract labor in S o u t h Africa and Chile, which along with migrant labor displays the highest forms of informality, suggests a tendency towards growing informalization. Workers are usually employed o n a daily basis and wages are piece-rate. It is extremely rare for contractors to have written contracts with workers, or to meet legal employment requirements. Social protection is difficult to enforce given the informality and fluidity of contract labor. Wage payment Forms of wage payment within the sector are varied, and can change according to the individual employer, tasks performed, form of employment, productivity of specific groups or of individual workers, or the stage in the season. A n individual worker with the same employer could receive different forms and levels of payment as the season progresses. Payments to workers can be based on: • Fixed weekly wage rates • Fixed daily wage rates for days worked • M i n i m u m fixed wage plus bonuses according to overall productivity of team or enterprise • M i n i m u m fixed wage plus piece-rate according to productivity of individual • Piece-rates only based on productivity of work team or individual worker. 37 Only p e r m a n e n t r e c e i v e r a t e s , a standard weekly wage. Informal workers are more likely to be o n piece they get n o income for the long periods of out of season u n e m p l o y m e n t . a n d T e m p o r a r y a g r i c u l t u r e . v a r i a b l e , workers receive payments all year round, and are more likely to workers manage to work an average of four months per year in Income poverty is widespread among women, wages are low and and there are complaints that they are not always paid in full. In Chile half of the male and 60 percent of women temporary workers in agriculture receive wages below the set minimum wage. In South Africa it is estimated that the wage needed to put an average household above the poverty line is $57.' T h e minimum wage for agriculture is currently under consideration and a key recommendation is a scale from $35 to $65.79 per m o n t h , depending on the magisterial district. In the Western Cape (where deciduous fruit is dominant) average farmworker earnings in cash were approximately $63.16. This was above the average cash wage for farmworkers in the country as a whole of $47.72. ' u s $1.00 = R11.40, March 2002. (The US/Rand exchange rate has varied considerably over the past year, and the figures used in this document reflect the exchange rate at the time of the writing of the document.) C o n t r a c t workers' earnings ranged between $38.60 and $115.79 per m o n t h , depending o n their task and the stage of the season. Some contract workers therefore would be earning below the recommended m i n i m u m wage for their district, and below the average wage necessary to keep a household above the poverty line. Box 2 provides further information on wage levels in Chile. It shows that m e n earn more t h a n women, especially in the top three deciles. Table 5 shows that temporary and p e r m a n e n t female agricultural workers are over-represented in lower income distribution deciles in Chile, and that temporary female agricultural workers earn less t h a n permanent female agricultural workers. Box 2: Income poverty risks among temporary workers in agriculture in Chile Chile The analysis below cont ains data from CASEN9 8 , a nat ionwid e household survey, on agricult ural workers. The data were collect ed b et ween Novem ber and Decem ber I 998, at t he st art of t he ex port season in t he cent ral region. The dist ribut ion of m ont hly labor earnings for men and wom en t em porary workers is given in Figure 5 below. Fi gur e 5: Labour earnings by decile and sex for temporary workers in agriculture in Chile 1998 50 deciles 60 39 Box 2 cont i nued Poverty risks apply t o households. Table 5 below com pares t he per capita household independent incom e of perm anent and t em porary wom en workers in agriculture w i t h t he nat ionwide dist r ibut ion of t he sam e measure of incom e. The table reports t he proport ion of t hese work ers found in each quint ile. If over 20 percent of workers are found in a part icular quint ile, it im plies over- representation. If less t han 20 percent of workers are locat ed in a part icular quint ile, it means t he group of workers is under- represented in t hat quint ile. Wo m en temporary workers are subst ant ially over- represented in t he lower incom e quint iles, and subst ant ially under- represented in t he higher incom e quint iles. The difference ex ist ing bet ween perm anent and t em porary workers capt ures t he increased risks arising from inform ality. Table 5: Locating permanent and temporary women in agriculture within the national income distribution in Chile Prop ort ion of w o m e n wor k er s in q uint ile Quint ile of per capit a Per m anent Tem porary aut onom ous household incom e Ist 2 nd 26.10 24.23 24.31 39.57 3 rd 21.79 25.44 4th 5,h 18.13 8.95 9.67 1.82 Elaborated by t h e au t h o r s using CA SEN9 8 dat a. Au t o n o m o u s i n com e ex cludes g over nm ent t ransf ers. A further measure of povert y risk is t he proport ion of wo m en t em porary workers whose per capita household incom e is below t he povert y line, basic subsist ence income, t he indigence line and basic food cost s. In I 998, four percent of wo m en t em porary workers in agricult ure had per capit a household incom es below t he indigence line, and I 9.8 percent below t he pover t y line. GENERA L A ND SPECIFIC RISKS A SSOCIA TED W ITH HORTICULTURE The risks affecting informal workers in horticulture A brief description is provided below on the risks affecting informal workers in horticulture. Unemployment and underemployment Unemployment and underemployment are very significant risks for those in informal employment in horticulture. T h e r e is a high incidence of unemployment among seasonal workers, and an absence of alternative employment opportunities in the offseason. Unemployment is a serious problem in S o u t h Africa, which is shedding its p e r m a n e n t agricultural workforce. Income poverty Income poverty occurs when income is insufficient to cover basic household needs. This risk affects all workers to a degree, but is particularly acute for informal workers in horticulture (see Box 2). Health T h e health risks, and especially reproductive health risks, faced by workers in horti' culture are significant, but have not been sufficiently well researched. Legislation and regulation have focused mainly on conditions that are easily observed, and can be linked directly to the working environment. However, less is known about longer term, less easily observable conditions. Health risks arise from a number of factors: • T h e use of toxic products by temporary workers without adequate training and protective clothing has been identified as a significant problem by a number of sources. Workers come into contact with toxic products in the application of pesticides, the handling of the fruit and the trees, and the fumigation of the fruit in the packing. T h e symptoms associated with the use of toxic products include allergies, eye soreness and dermatitis. T h e longer-term effects have n o t received m u c h attention, but these could be substantial. • Research in Chile has increasingly highlighted the risks to women's health of working in export horticulture. T h e Regional Hospital in Rancagua carried out a 41 study of malformation among the newly bor n between 1975 and 1990 and found that the rate of malformation per 1000 live births in the region was 3.6, as opposed to 1.93 for the country as a whole. In 93 percent of cases of malformation, the mother was aywvutsrponmlkihgfedcbaTPECBA temporera — a temporary worker — or the parents had been exposed to agriculture-related toxic products. This region has the highest concentration of export horticulture in the country. Hygiene and sanitation are also important sources of health risks. Lack of drinking water or toilets can lead to stomach problems and infections. Together with the cold and humidity in the cold storage and packing areas, these are responsible for a high incidence of cystitis among women workers. The physical demands and long hours of work result in muscular pain and discomfort, lumbago and rheumatism. Because the link between the work environment and these health conditions is less direct, and in many cases the conditions are longer term, it fails to be identified correctly. A preventive health test carried out with 95 temporeras in the 9 th Region of Chile in 1996 found that 56 percent had muscular problems, 44 percent psychological problems, 37 percent stomach problems, 34 percent eye problems and 17 percent skin problems. Interestingly, when asked w h e t h e r they had a work-related health problem, only nine percent of temporeras answered yes. 42 Injuries or death from accidents Injuries or d e a t h from accidents during transportation to and from work has led to changes in legislation in Chile, and to media a t t e n t i o n in South Africa. This is a severe problem for casual and seasonal workers living at a distance from places of work and who travel on a daily basis. Transporting migrant workers living in hostel accommodation has also been raised as an issue in S o u t h Africa. W h e r e labor contractors are involved, the transport provided is often of poor quality, therefore increasing the risk of accidents. Disability T h e r e are few studies of the extent of morbidity and mortality among informal workers, especially as these workers are rarely entitled to disability and survivor pensions, and this is the point at which statistics of this kind are collected. T h e r e are two sources of disability insurance for workers in Chile, neither of which is accessible to informal workers in horticulture. Disability arising from work-related accidents is insured through individual retirement plans. These have an extra contribution covering disability insurance, and provide earnings-related pension benefits. T h e problem is that very few temporary workers are affiliated to these pension plans. In addition, a condition of entitlement to disability pensions is that the worker is contributing at the time of the accident. A further condition is that the loss of working capacity is at least 50 percent. After prolonged debate, entitlement to a disability pension has now been extended for unemployed workers to one year after the start of the unemployment spell. However, these workers are only entitled to a much-reduced benefit. Temporary workers are at greater risk because of their irregular contribution record and affiliation gaps. In South Africa the legislation that covers formal workers for injuries on duty does not extend to informal workers. There is a non-contributory disability grant of $54.39 a m o n t h . This is difficult to access, and ensuring its continuity is also difficult. If a worker who had been injured on duty is granted this type of disability grant, the employer's responsibility towards that worker falls away. Longevity risk Longevity risk refers to the strong likelihood t h a t workers in informal employment will outlive their resources in old age, especially as they are n o t covered by employ' ment-based pension schemes. In South Africa, the risk is significantly reduced by 43 the existence of the non-contributory social pension, which is similar to the disability grant. As there is n o counterpart of the social pension in Chile, the longevity risk for Chilean informal workers in horticulture is substantially higher. Ignorance of entitlements Ignorance concerning entitlements, particularly regarding legal employment rights, is an important problem in both Chile and S o u t h Africa. In South Africa, the lack of understanding of employment rights is a problem where there are low levels of literacy. Isolation in rural c o m m u nities and a lack of access to means of c o m m u n i c a t i o n compounds this problem of inadequate information. Homelessness and poor housing conditions This is an issue particularly for on-farm workers in S o u t h Africa, where p e r m a n e n t workers were traditionally provided with housing. Since 1997 there has been a trend to move workers off-farm, or n o t to replace on-farm labor. 44 Migrant workers in b o t h Chile and S o u t h Africa also have problems with the accommodation provided for them. In Chile, and increasingly in South Africa, temporary workers live in their own housing separate from their work. Off-farm seasonal and contract workers often live in rural or urban shanty towns where housing conditions can be appalling, with a lack of infrastructure and insufficient sanitation. Social and political exclusion Social and political exclusion is a key risk for informal workers in horticulture. Historically unionization has been low in agriculture, and this is particularly the case in export horticulture. In Chile only one percent of informal workers in horticulture are unionized, and in South Africa estimates of union membership vary from two to eight percent at the most optimistic. Traditional rural unions are weak in addressing the needs of tempos rary, casual and migrant workers, and tend to have a male bias that is poor in addressing the needs of women workers. Social protection for informal workers — a social responsibility analysis One of the purposes of doing value c h a i n analysis is to identify different actors a n d different interest groups w h o will be present at different points o n the c o n t i n u u m . Most workers engaged in horticulture are in a n informal e m p l o y m e n t relationship, and face greater exposure to social risks. T h i s section looks at the social responsibilities of the institutional actors linked to the h o r t i c u l t u r e value chain. Multi-lateral and state The core labor s t a n d a r d s set by the I L O are f r e e d o m of association, elimination of forced labor, abolition of child labor and elimination of discrimination in respect to employment and occupation. T h e n o n - c o r e labor s t a n d a r d s are conditions of work, safety and health at work, i n c o m e security a n d fair t r e a t m e n t . B o t h core a n d n o n core standards apply in principle to all workers and, therefore, to informal workers ill horticulture. However, national legislation has o f t e n focused o n p e r m a n e n t , fulltime employees in the formal economy, w h i c h results i n a gender bias as m e n are often concentrated in t h e formal e c o n o m y a n d w o m e n in the informal economy. Recent changes in a p p r o a c h at the ILO stress the fact t h a t the spirit of the regulations applies to all workers, and particular a t t e n t i o n is currently being paid to informal economy workers. There are encouraging signs t h a t the C h i l e a n a n d S o u t h A f r i c a n g o v e r n m e n t s are both taking steps to incorporate informal workers u n d e r t h e labor legislation, b u t so far change has b e e n limited. In South Africa: • Legislation has b e e n a m e n d e d to cover agricultural workers and, to a lesser extent, seasonal a n d temporary workers. Basic conditions of e m p l o y m e n t n o w apply to agricultural workers, including seasonal and temporary workers. T h e s e include m a x i m u m working hours, sickness benefits and a n n u a l leave. Formalization of e m p l o y m e n t is required in the form of a written c o n t r a c t and associated information of workers' rights. ' Unemployment insurance has b e e n e x t e n d e d to agricultural and domestic workers, but seasonal or temporary workers are still excluded. The 1995 Labor Relations A c t enshrines t h e right to belong to a union, a n d encourages workers' participation t h r o u g h workplace forums, b u t it does n o t Provide for full u n i o n access to farms, a n d it restricts workplace forums to large employers. 46 In Chile: • Labor legislation encouraged unionization and collective bargaining and contained many employment protection provisions prior to 1973. W h e n the military dictatorship reversed many of the provisions protecting workers, the impact o n the agricultural sector was severe. Unionization rates in agriculture were 42.4 percent in 1973, but by 1985 the national unionization rate had fallen to 5.2 percent. By 1991, with the restoration of democracy and some employment rights, unionization had only reached nine percent. • T h e emphasis of labor reforms since 1990 has been mainly to improve workers' mobility and training, and has focused to a lesser extent on the extension of social protection. At the same time, there is limited, but increasing, recognition of the needs for social protection among temporary workers. Legislation introduced in 1994 for the first time explicitly defined a category of temporary worker. Employers are required to issue a written labor contract for workers, and to register this in the Labor Office after 28 days of continuous employment. • Employers must make adequate provision for housing, transport and food consumption. T h e legislation also makes provision for school facilities to be used as creches in school holidays, and makes fruit producers responsible for payroll contributions to social insurance programs if the workers are employed through a labor contractor. • These measures were extended by further legislation in 2001 in two important respects: the requirement of minimum standards of hygiene relating to food consumption, and transport. Both these constituted a response to related health and transport hazards reported in the press. In what was also a response to public concerns, the legislation now requires the registration of labor contractors. Market social protection Private formal social protection In Chile, informal workers in horticulture have access to health care as indigents only. Health insurance is provided through a mixture of employment-based insurance, and public provision as a last resort. T h e r e is free public provision available to indigents, but the coverage is mainly for emergency and primary health care services. I n o r d er zyxwvutsrqponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA to access secondary and tertiary h e a l t h care workers need contributory to demonstrate a record, which most informal workers c a n n o t do (see Box 3). There are a number of reasons for the low rates of coverage among these workers: • Employers are reluctant to facilitate affiliation to social protection because this requires workers to have a written contract, which in turn imposes other labor responsibilities on employers, such as maternity leave and restrictions of employment termination. • Payroll contributions may deter some workers from affiliation. Payroll contributions are around 21 percent of earnings in Chile, including 13 percent towards individual retirement plans, seven percent towards health insurance, and one percent for work-related injuries insurance cover. Temporary workers, who work four months a year, stand little chance of collecting benefits (women need to reach 60 years of age and have 20 years of contributions to be in a position to collect the minimum guaranteed pension benefit. • Pension fund managers work for profit making private corporations and have few incentives for ensuring contributions are collected, especially from workers in irregular employment and in rural areas. Box 3: Low coverage of formal social protection programs in Chile Rat es of cover age of f or m al social p r o t ect i o n p r ogr am s are l o w for t em p o r ar y wo r k er s in agricult ure in Ch i l e. Dat a f rom a I 998 Ho u seh o l d Su r vey (CA SEN ) sh o w s a significant coverage d if f er ent ial ex i st i n g b et w een p er m an en t an d t em p o r ar y wo r k er s in agricult ure. Tabl e 6: Coverage of pension plans and contract of employment among agricultural workers in Chile in 1998 Pe r m a n e n t Tem porary Percent not co n t r i b u t i n g t o a p en si o n p lan 48 67 Percent w i t h o u t a co n t r act of em p l o ym en t 20 64 Source: Direccion del Trabajo (2000). 48 As regards pensions, Chile has a mandatory, individual retirement plan pension system. Workers are required to contribute 10 percent of their earnings to an individual retirement fund with a private pension provider, and a further two to three percent to cover an additional disability and survivor insurance premium, and the charges of the private providers. Workers can access their retirement fund on reaching retirement age at 60 for women and 65 for men. Government's role is to m a n d a t e the participation of workers and to provide minimum pension guarantees for workers with at least 20 years of contributions, b u t with insufficient funds at retirement. This minimum pension benefit is around 80 percent of the minimum wage. Chile has a non-contributory pension benefit for people over 75 or disabled with no other means of support. T h e benefit is around 20 percent of the minimum wage. In South Africa there is private and public provision of health care, pensions and compensation for work-related injuries. T h e r e is a wide range of voluntary private pension plans b u t coverage is concentrated among high earners. T h e non-contribu- tory pension plan, the social pension, pays a means tested benefit from age 65 forzyxwvutsrqponmlkjihgfedcbaYWVUTSRPONM men and 60 for women. T h e maximum benefit is $57 per m o n t h , and constitutes a key source of income for poorer households. More t h a n three-quarters of all women 60 and over and men 65 and over receive the benefit (a demonstration of the high ratezyxwvutsrponmlkjihgfedcbaWTSPMLJIHG of poverty in the majority African population). A growing body of research points to its effectiveness as a poverty alleviation mechanism. However, the processing of applications for this pension can be a lengthy procedure, and there is often a long interval between a worker retiring and starting to receive the pension. Emerging codes of conduct Codes of conduct covering e m p l o y m e n t conditions are being introduced by a growing n u m b e r of global buyers, particularly supermarkets in Europe and the UK but less so in the US. T h e process of developing the codes has in some cases involve collaboration between private sector companies, N G O s and trade unions, in a multi-stakeholder approach. S o u t h African horticulture, which primarily supplies European markets, is more favorably affected t h a n Chilean horticulture, which primarily supplies the US. Codes of c o n d u c t are potentially one means of extending social protection via the value chain. T h e i r efficacy depends in part o n their content, and o n the extent of their enforcement. But where they specify core labor rights, gender equality, a living wage, health and safety and adherence to national legislation, they could provide an important complement to other mechanisms of social protection for men and women workers in different sectors. C o n t i n u e d pressure from civil society organizations could also help to improve the c o n t e n t of codes, and multistakeholder participation provides another mechanism of enforcement where labor inspectorates and national mechanisms are weak. The fact that codes operate along supply chains also highlights the importance of understanding those chains, and the position of workers within them. T h e potential to extend the use of private sector codes as a means of social protection also raises the following questions: • Who, within the supply chain, is responsible for ensuring that codes (and their related social protection) are adhered to: the global buyer, intermediary agents and/or the immediate employer? • What, in relation to social protection, is the relationship between the private sector, national government and civil society organizations? • What, in terms of the provision of social protection, is the relationship between local, national and international organizations b o t h within and connected to the value chain? 'n> there are gender limitations in codes of c o n d u c t that need to be if they are to cover all workers equitably. 3° • Codes of c o n d u c t often base their design o n the implicit assumptions of p e r m a n e n t employment, and are weaker in relation to informal employment conditions. • Some codes of conduct are weak or negligible in their coverage of gender employment issues, such as equal pay a n d sex discrimination (except codes following the ETI and SA800, as they are based on ILO core conventions). H Few codes extend to those employment-related issues that are particularly important for women workers, such as reproductive rights, childcarc provision or sexual harassment. • Codes do not address the underlying gender norms that lead to the concentration of women in informal work, where the conditions of employment and of social protection are poorer. This is a fast developing area of activity for social protection. It opens up the potential for new multi-stakeholder approaches to social protection for those who, through their employment, are linked, however indirectly, to global value chains. _ , . . ,. , . > fc S A M ^ I M < *: . « tsrpomjeaJ j a * .L- SA R A : . Community-based social protection Given the lack of a t t a c h m e n t of many informal horticultural workers to a particular e m p l o y e r , a potential avenue for improving social protection is via the communities in which they live. There is very little evidence of informal community-based social protection among zyxwvutsrponmlkjihgfedcbaWTSPMLJIHGFEDCBA temporeras. This is associated with their lack of unionization, fluid employment in space and time, absence of a tradition of informal support, and weak solidarity values among t h e m and in society as a whole. A survey of voluntary organizations zyxwvutsrponmlkjihgfedcbaZYXWVUTSRPONMLKIHGFED among ywvutsrponmlkihgfedcbaTPECBA temporeras found that there were 102 of t h e m in the Central Region, with o n e - t h i r d aimed at improving working conditions and earnings capacity. Sustainability of these organizations is a problem. Another focus of public programs and community organizations is childcare. This is an acute problem for temporeras because the season coincides with school closures, and in any case they work long hours and through the week. Public programs have brought together local government representatives, producers, schools and community organizations to use school facilities during the school holidays for childcare for temporeras. In South Africa many fruit workers traditionally lived on-farm, and the paternalism of the farmer provided an important source of protection. This is changing with the modernization of the employment relationship and the shift of workers off-farm. Community forms of social protection could thus become important, though sustainability is always likely to be a problem. Social protection through the household In South Africa, on-farm employment reflected a strong gender division of labor, xwvutsrponmlkihedcaTIH with permanent employment for men on the assumption that their female partner worked on a temporary or seasonal basis. M e n were seen as the primary breadwinner, with women's primary responsibility in the reproductive sphere, making only Marginal contributions to household income through seasonal earnings. T h e shift from on-farm labor has reshaped this gender pattern, and both men and women can now employed on a temporary or limited term basis. In Chile, the evidence of household diversification is also weak. There is a S1 gnificant concentration of seasonal work among temporeras' households, with b o t h en and women working in this capacity. Close to 50 percent of households with m poreras have no members with permanent, stable employment. This militates against the perception that women workers contribute only marginal income to the household, and underlines the precarious basis of total household income for many temporary workers. T h e capacity of households to provide social protection is therefore limited by the lack of diversification in employment, and by the shift to informal forms of work for both m e n and w o m e n in horticulture. LESSONS A ND POLICY IMPLICA TIONS This section focuses o n what lessons can be drawn for the future development of social protection policy for these workers, and will identify research and data needs. 1. Incorporating informal workers fully under existing labor legislation This involves extending the concept of worker used in labor standards and national legislation to cover the full range of work. This also requires a strong focus on reshaping existing mechanisms for the enforcement of labor regulations covering these workers at the national level. 2. Extending coverage of public programs for informal workers in horticulture Due to the nature of their employment relationship, informal workers have very limited access to public programs other t h a n those provided for indigent people. This is due to a number of factors: entitlement may be dependent on more or less continuous employment, or recovery costs and administrative gate-keeping may deter recipients, or the location of public providers may be difficult to reach. In some cases (see Box 4) these barriers can be overcome through internal coordination of government agencies. T h e fact that this is not automatically forthcoming points to the low policy priority governments have placed upon the social protection needs of informal workers. Extension of social protection provided to informal workers can be a low cost and effective solution to their needs. It involves the coordination of government agencies at the national and local levels, as well as the involvement of employers. H 53 4: Extending health insurance to tsrpomjeaJ t emporeras in Chile a promising development? Public service provision t o inf orm al wor k er s is a p ot en t i al l y f ruit f ul avenue for ex t ending social p r ot ect ion t o t h em as sh o w n by a recent policy change in Chile temporeras. aimed at ex t ending coverage of healt h insur ance t o t h ezyxwvutsrponmlkjihgfedcbaWTSPMLJIHGFEDCBA In Chile, t here is a choice of privat e or public healt h insurance. Wo r k er s are required t o con t r i b u t e seven percent of t heir earnings t o a healt h insurance plan reim bursing a p r op or t ion of healt h care ex pendit ures. High earnings work ers can opt for a pr ivat e provider, but l ow and m edium earnings wor k er s are m ost ly covered by t he public healt h insurance plan offered by FON A SA (Fondo Naci onal de Salud). Those w i t h o u t incom e and t he ver y poor have on l y lim it ed access t o public healt h care. As a high pr opor t ion of temporeras wo r k w i t h o u t cont r act s, they could only access basic healt h care as indigent s for m ost of t he year, w h i ch provided a st rong d isincent ive for af f iliat ion. President Ricardo Lagos m ade a co m m i t m en t during his president ial cam paign t o review t his, and once elect ed he asked t he g over nm ent w o m en 's service SERN A M to negot iat e w i t h FON A SA t o ex t end cover for o u t p at i en t and secondar y healt h care for i 2 m ont hs t o temporeras w i t h t hree m on t h s of payroll cont r ib ut ions. Later t he con t r i b u t i on requisit e w as reduced t o 60 days. This change now m eans all- year- round healt h insur ance cover for temporeras. and in fact for all wor k er s on tem porary or fix ed cont r act s. There wer e sub st ant ial ad m inist r at ive problem s in im p lem ent ing t his new regulation, given t he irregular nat ure of temporeras em p l oym en t , t he absence of cont ract s of em p l oym en t , and t he bureaucracy associat ed w i t h cost recovery in public hospit als. The pract ical sol u t i on w as t o provide t he temporeras w i t h a card, which on p r esent at ion at t he appropriat e healt h provider guarant ees t heir access to healt h care w i t h o u t f urt her ad m inist r at ive hurdles. Th e n ew card w as introduced in Jan u ar y 2 0 0 2 . 54 3. Developing social protection linkages T h e value chain in horticulture provides significant opportunities to develop social protection linkages. T h e concerns of retail firms in the N o r t h relating to labor standards further d o w n the S o u t h e r n end of the chain have led to the establishment of codes of conduct. This has happened particularly in S o u t h African horticulture, which exports mainly to European markets. These codes provide a new development in social protection, both in terms of the new stakeholders involved, as well as the transnational scope. They also provide a different channel for the implementation of labor standards and national legislation. T h e r e are linkages here to government and multilateral organizations, which could be exploited to extend social protection. However, it is important to realize that they are voluntary codes of conduct and cannot replace labor legislation. As has already been noted, the gender sensitivity of codes needs to be improved if they are to address the specific employment conditions of seasonal and temporary workers that are predominant in horticulture. In particular, issues of equal pay, reproductive health rights and childcare need to be integrated into codes wherever possible. 4. Involving public and private participants in social protection A wide range of potential stakeholders are involved in the production of social protection for informal workers in horticulture. Bringing participants together is not easy and requires leadership, the identification of c o m m o n interests and agreement on a c o m m o n agenda. This approach has yielded some improvements in Chile (see Box 5). 5. Empowering informal workers T h e toughest but surest way of extending social protection to informal workers in horticulture is to secure their empowerment and participation. T h e evidence from South Africa and Chile shows that this is a formidable challenge. Established organizations, such as trade unions, which could represent these workers, have seldom done so. Unions find organizing informal workers difficult, as there is no defined employer- employee relationship. In addition, the seasonal or temporary nature of horticultural employment has militated against this. Very few grassroots organizations representing these workers have emerged in the past, and where they have their focus has been on income and skills generation. They have n o t been able to sustain themselves over time. Initiatives in support of community-based social protection in Chile and S o u t h zyxwvutsrponmlkjihgfedcbaZYXWVUTSRPONMLKIHGFEDC Africa have b e e n lost t h r o u g h reform. For example, in S o u t h Africa some community-based organizations and rural advice offices have closed. In Chile, a n N G O t h a t assistedywvutsrponmlkihgfedcbaTPECBA temporeras to get h e a l t h benefits closed due to a cutback in donor funding. Policy design has largely bypassed informal workers, and it has b e e n difficult to incorporate t h e m in policy discussions. Further thinking and action is needed here, especially by considering the experiences of other countries. T h i s involves developing linkages from the ' b o t t o m up' as the only way of securing a meaningful and sustained improvement in social protection for informal workers. BoxzyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA 5: Commissions set up to extend social protection to tsrpomjeaJ t emporeras in Chile In Jan u ar y 2 0 0 1 , f ol l owi ng a st rong lead from t he President of Chile, SERN A M set up four t r i p ar t i t e com m issions, w i t h t he p ar t icip at ion of em ployer s, wor k er s' representat ives and gover nm ent depar t m ent s, t o consider w ays in w h i ch t he welf are of t em p or ar y work ers in hor t i cul t ur e could be im proved. In ad d it ion, t he Mi n i st r y of Labor at t em p t ed parallel d iscussions on labor cond i t i ons, b ut t hese did not get off t he ground. The four com m i ssi on s cover Healt h and Saf et y at Wo r k , led by t he Healt h Mi n i st r y; Childcare, led by SERN A M ; Pest icides, led by t he Mi n i st r y of Agr icult ur e; and Training, led by SENCE (t h e t r aining agency). The p ar t icip at ion by em ployer s included t he Sociedad Naci on al de Agr icult ur a (l an d own er s' associ at i on ), t he Federacion Grem ial de Product ores de Fruta (f ruit producers' associ at i on) and t he Asoci aci on de Ex port adores de Chi l e (ex por t er s' associat ion). Par t icip at ion by wor k er s w as pat chy and w as lim it ed to t he com m i ssi on on pest icides. The com m issions m et during 2001 and developed plans of act ion. As a wh o l e, t he com m issions have m ade posit ive advances in generat ing suppor t and consensus on policy by st ak eholders, and have had an i m p or t ant effect in coor dinat ing policy ef f ort s am ong t he different gover nm ent agencies. At t he sam e t im e, a num ber of dif f icult ies wer e ident if ied. Ensur ing work er representat ion is a problem , and alt hough t he i m p l em en t at i on of policies adopt ed by t he comm issions is possible in t h ose areas under gover nm ent cont r ol, f urt her wor k is needed to im p lem ent t h em on t he ground. Cr eches, for ex am ple, need cooper at ion at t he local levels from producers and nat ional and local gover nm ent agencies. Al so , em ployer s are reluct ant t o engage in discussions on labor con d i t i on s, largely because of t he st rong vet o in t his area of gover nm ent policy t h ey ex ercise in pract ice. CO N CLUSIO N A N D FURTH ER RESEA RCH By using a value c h a i n analysis of h o r t i c u l t u r e a n d a social responsibility matrix of the actors and institutions involved in t h e p r o d u c t i o n of social protections for workers in the sector, this study developed b o t h an analysis of the social risks affecting these workers, as well as t h e linkages a n d channel s involved in social protection. Combining these two f r a m e w o r k s helped to focus o n the constraints and opportunities in extending social p r o t e c t i o n to informal workers in horticulture. Globalization poses i m p o r t a n t challenges for social protection. It has increased the demand for social p r o t e c t i o n as c h a n g e s in the labor market and the employment relationship c o n c e n t r a t e risks a m o n g t h e most vulnerable workers. It has changed the parameters a n d t h e a g e n t s involved in the provision of social protection. The study found t h a t globalization has resulted in a rise in employment in horticulture, and that this labor force is p r e d o m i n a n t l y female and informal. In horticulture, risks are offset d o w n t h e supply c h a i n , a n d employers are u n d e r significant competitive pressures to e v a d e their legal a n d m o r a l responsibilities. This situation is exacerbated by the use of labor c o n t r a c t o r s . T h e most vulnerable workers are the ones absorbing most of t h e risks, a n d w o m e n are c o n c e n t r a t e d in this group. In analyzing t h e sources of social risks faced by horticulture workers, the study found t h a t informal workers s h a r e a c o m m o n set of social risks with all workers, but in addition they face a h i g h e r c o n c e n t r a t i o n of risks arising from the sector they work in, and f r o m t h e n a t u r e of their e m p l o y m e n t relationship. This was helpful in identifying the areas w h e r e i n t e r v e n t i o n s to e x t e n d social protection are most needed, and in h i g h l i g h t i n g t h e i n a d e q u a c i e s of existing channels of social protection. T h e provision of f o r m a l social p r o t e c t i o n is limited for workers in the horticulture sector. Labor s t a n d a r d s , as applied by n a t i o n a l legislation, often exclude informal workers, and t h e legal p r o t e c t i o n they are entitled to is inadequately enforced. Market provision of social p r o t e c t i o n also excludes these workers. Formal social protection designed for f o r m a l e m p l o y m e n t is seldom attractive to informal workers. Private providers of social p r o t e c t i o n programs, a n increasingly c o m m o n situation in the developing world, h a v e few incentives to incorporate informal workers in horticulture, a n d this applies especially to female informal workers. Community zyxwvutsrqponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA organizations are weak, and there is a poor level of unionization among temporary workers because of the fragmented n a t u r e of their employment (in space and time) and because of the orientation of trade unions (to formal sector and political parties focused on state action in Chile). Household employment diversification opportunities are restricted because of low skills and mo no -cultivation, among other factors. O n the other hand, the integration of horticultural exports into markets in the N o r t h has created new channels for social protection, because of attempts to reduce the e n v i r o n m e n t a l and social protection gap between the S o u t h and the North. This has led to the development of codes of c o n d u c t implemented by producers at the instigation of n o r t h e r n firms. On the question of how to extend social protection for informal workers in horticulture, there are a n u m b e r of areas where expansion of social protection is necessary and feasible. T h e r e is a need to develop, where they are missing, and strengthen, where they exist, linkages across all four m a i n groups of institutions involved in producing social protection: the market, the state, the community and households. The main areas where further research is needed are the following: • The issue of w h e t h e r the conditions t h a t were observed in Chile and S o u t h Africa apply to o t h e r countries needs to be considered more fully. It would be important to investigate whether other countries have similar experiences throughout the global value chain, in b o t h the N o r t h and South. • Knowledge of die role of households in producing social protection for informal workers in agriculture is limited. This is in part because of the lack of reliable household data. T h e r e is an urgent need to generate these, perhaps through supplementary questionnaires in nationwide household surveys. T h e availability of better household data for Chile was extremely useful, and its absence for South Africa limiting. a More research is needed on migrant and contract types of labor. • More research is needed on the development of partnerships in social protection that incorporate direct worker participation. SOCIA L PROTECTION FOR INFORMAL WORKERS IN THE GARMENT INDUSTRY: PHILIPPINES & THA ILA ND Research by D o nna D o ane, Ro salind a O freneo & D ao no i Srikaj 6o Part I Introduction This study focuses o n the value chains in the garment industry in Thailand and the Philippines. It begins to assess the risks and vulnerabilities of workers at various points on the chain. Its main concern is the different circumstances faced by formal factory workers; subcontracted and temporary workers; agency workers who have been substituted for formal factory workers in the process of the casualization of the industry, and various types of homeworkers. A not e on t er m inology Terminology used to describe the various types of informal economy workers, as well as the types of enterprises employing them, differs from country to country. The following terms have been used to cover types of workers referred to in this document. Sub cont r act ed work ers: This general term has been used to cover a range of contractual arrangements for workers who are not permanent, formal economy workers. Ag en cy work ers: In Thailand these are referred to as contracted or temporary contracted workers. These workers are employed by an agency that hires out their services. They are distinguished from subcontracted workers in that they are not paid by the enterprise where they work. In contrast, the agency pays their wages, exercises control over them, shifts them from one company to another, hires, rehires, or lays them off as the case may be. It should be noted that they are not exactly equivalent to the temporary agency workers in the service sector of high') industrialized countries who serve as very short-term replacements for formal workers, with fewer responsibilities because of the time-constrained nature of their employment. Agency workers are expected to do more or less what formal workers do in the factory, but on different terms. Hom ework ers: These are people who conduct their earning activities in the place where they live (McCormick and Sehmitz 2002) These could be own-account workers, or workers with contractual arrangements with informal or form enterprises. Sub cont r act ing ent erprise: This refers to any enterprise that subcontracts — or outsources — some of its wor ® homeworkers or to other enterprises. It can be quite high up the value chain in the formal economy or lower down a informal end. A N OVERVIEW OF THE INDUSTRY W ITHIN THE GLOBAL ECONOMY Value chains in the industry The garment industry in Asia, as in countries elsewhere, has very diverse value chains. T h e longest chains usually involve many layers, extending from large retailers in industrialized countries, through a series of middlemen, webs of factories, contractors and subcontractors in several countries, down to neighborhood h o m e based 'mini-factories' and individual homeworkers in their own homes. These long chains typically involve the sale, in industrialized countries, of three types of garments: • basic garments, with a long shelf life, that compete largely on the basis of price • fashion-basic garments, with shorter shelf lives, that compete o n the basis of quality, particular styling and/or accessories, and to some extent price • fashion garments, which are more specialized, and sometimes more expensive, involving shorter production runs and a short shelf life. A variation of these is the type of long chain that emerges from a vertically integrated company. This is a company that controls all, or a number of, the stages of production and distribution. For example, it may own or have close ties with factories making inputs into production, such as yarn, thread, cloth and other supplies; it may use its own or dedicated factories for garment production, which in turn may outsource some parts of production; and it may also have its own distribution network and even retail outlets. In a vertically integrated long chain, the retailer not only markets the goods, but also designs the clothes and specifies and sometimes supplies the materials to be used. These large firms tend to rely heavily on marketing and branding, and thus may have a relatively high international profile. A more c o m m o n type of chain t h a n the above is the low profile, long to medium length chain. These chains may involve retailers, middlemen, wholesale markets, factories, contractors and subcontractors, o n down the line to homeworkers in some cases. In these chains, the factory workers' and homeworkers' products tend to go morc toward regional, domestic, or relatively low-priced international markets. Designs and materials tend to come in from local or regional sources. In these chains, more of the processes (developing patterns, cutting, stitching, assembling a nd other activities) are likely to occur in one geographical area t h a n is the case w ith more high profile, top-down, long chains. 62 Short chains could involve high-end products commissioned and designed by wellknown retailers in the industrialised countries. In this case, orders are usually placed directly with artisans or producers (garment workers) with very few, if any, middle-enterprises involved. However, the far more c o m m o n form of short chain is the low profile/low end chain in which garment workers make clothing for local small-scale retailers, wholesale markets, sale on the street, individual customers or for local institutional buyers, such as a city government buying school uniforms. Homeworlcers and other informal workers in garment value chains Home-based production work is also done in some parts of the region, depending o n the availability of homeworkers with skills such as sewing and embroidery, and reasonably clean and electrified workplaces in homes or in neighborhood 'minifactories'. In contrast, conditions in less industrialized parts of Southeast Asia and South Asia have sometimes precluded the m o v e m e n t of garment production out of a factory setting. Most of the homeworkers' products go toward domestic or local markets, and less often to the lower-priced international markets. T h e lowest priced products of homeworkers are typically for very localized markets and involve very short value chains. As the chain gets shorter, the homeworker has a clearer idea who the ultimate purchasers may be and who the contractor — the 'employer' — is. As the chain gets longer, b o t h the 'employer' and even the geographical location of the ultimate purchasers may move into a fog of complex subcontracting relationships. This fog may be created deliberately to get around laws relating to labor, health and safety, the environment and social protection, thereby lowering costs substantially. Although unreasonable and highly exploitative behavior is not the norm in all parts of the industry, greater transparency and sharing of benefits is critically needed. Typically, workers face the following serious difficulties and constraints: • Chronic illnesses associated with work, including repetitive injuries, respiratory diseases and chronic back, joint and related pain • Disease and health problems associated with poverty-linked overcrowding, pollution, poor lighting and ventilation, and other unsafe, unhealthy and often hazardous circumstances • Significant gender-related health problems and needs • Difficulties in accessing adequate and affordable social insurance coverage, including health care benefits — especially for informal workers • Women, who form the majority of workers in the garment industries of b o t h Thailand and the Philippines, range in age from 20 to 50. They face further difficulties such as: • Less access to education and resources, and fewer employment alternatives compared to m e n in equivalent circumstances • Lower incomes and irregular employment throughout their lives due to family responsibilities. They are thus susceptible to a downward spiral of overwork and lack of adequate care. The garment industry in Thailand and the Philippines Thailand and the Philippines are good examples of countries in the region that have had years of experience with b o t h factory and home-based garment production. T h e countries are quite different. A l t h o u g h Thailand has a long history of the production of fine textiles and clothing, the country's development of modern textile and garment industries, compared to other regions, came relatively late. By the late 1990s there were estimates of approximately 2 600 garment firms in Thailand. This excluded the very large numbers of enterprises with fewer t h a n 30 workers that were not registered. It is said that large firms, which handle most of the stages of production within the same factory — although with rapid increases in contractualization and outsourcing to homeworkers in recent years — currently hold about half of the registered capacity. Traders or exporters who do not necessarily own their own factories, b u t instead deal in products from small firms, subcontractors and homeworkers, also handle some of the subcontracting in the industry. T h e industry in Thailand is complex and, relative to the Philippines, does not have such highly visible US, European, or other well-known, high profile, long chains, even though many of the garments made in Thailand end up in US and European as well as other international markets. This may have implications for codes of conduct and ethical trade initiatives that focus o n the best-known labels and firms in the industry. T h e less well-known manufacturers and buyers involved in these low profile long chains are not as likely to be concerned with a 'clean' image since their products will not enter the chain in a highly visible way. T h e products of the combined textile and garment industries in Thailand constitute the second largest export commodity group in the country, registering over US $5.2 billion in 1999. Of the one million workers employed in the combined industry, it is estimated that about 20 percent are in textile production and 80 percent are in garments. (These figures are for factory workers and do not include homeworkers.) Turning to the Philippines, the importance of the garment industry increased from the 1970s to the 1990s as national policy began to be more export-oriented. As in Thailand, small firms predominate in the industry. In 1988 roughly 82 percent of all firms were classified as small. Again, as in the case of Thailand, the country's garm e n t exports go primarily to the US and other industrialized markets. In the Philippines the 1970s and the 1980s were years of rapid growth for the garm e n t industry, although it trailed far behind the electronics industry in terms of export earnings, employment and value added. Foreign direct investment (FDI) in the industry continued to grow through the early-to-mid 1990s, as wage rates remained the lowest by far of the early industries in Asia, even compared to Thailand and Malaysia. However, by the early to mid 1990s, the disadvantages of investing in garment production in the Philippines — and in Thailand as well — began to outweigh the advantages, and the garment industries in these two countries were clearly in t r o u b l e . T h e garment industry in the Philippines in particular has been hampered by the weakness of its textile industry and the need to import raw materials and inputs. Added to this has been the rise in regional free trade blocs and other initiatives, such as the N o r t h Atlantic Free Trade A g r e e m e n t (NAFTA) and the Caribbean Basin Initiative. T h e rise of new low-wage countries that could act as credible competitors to b o t h Thailand and the Philippines has also impacted o n the industry. Although the garment industries in both the Philippines and Thailand were in decline before the financial crisis of 1997, the crisis accelerated the trend dramatically, with garment factories closing and factory workers being laid off in large numbers. Recent studies of the impact of the crisis o n homeworkers in Thailand, the Philippines and Indonesia underscore the fall in job orders during this period, together with the rise in b o t h costs of production and costs of living. T h e piece-rate wage has declined, resulting in the need for many homeworkers to seek alternative, even more precarious, employment. Another aspect that has impacted negatively o n the garment industries of Thailand and the Philippines has been the change to lean retailing as a requirement for competition in the markets of industrialized countries. This involves producing o n a Just-in-Time basis, shortening lead times, speeding up re-orders and design modifications and making garments floor ready. This shift, from an emphasis on labor costs to speed and delivery, affects in particular the fashion-basic segment of the market, which has in recent decades been one of the two countries' main areas of expertise. Analysts say that lean retailing favors production in countries located relatively close to the final markets. It has been argued that foreignowned companies dominate the industries of the two countries in terms of investments and exports, 111 spite of the fact that those that are partially or wholly foreign- owned actually account for only a relatively small fraction of the total number of firms. Since these large c °mpanies have n o solid domestic base (as opposed to, for example, the large locally-owned •rms in East Asian countries), their future plans are not necessarily tied to Southeast Asia. If the large firms succeed in upgrading their production lines and reorienting toward the high-value end of the industry, workers in Thailand and the Philippines may be able to push for higher wages and better benefits since a firm's image and reputation may become an important component of its marketing strategies. However, if instead the large firms simply move to lower-wage and lower-cost countries that can produce low-priced and good quality products, workers in Thailand and the Philippines will obviously have less room to negotiate for better terms of employment. Smaller, locally owned firms may be less likely to move. Their workers are also considered the most vulnerable in the face of new competition as these firms are also less likely to be concerned with labor laws, codes of conduct or their image abroad. All of these factors will help define what may or may not be possible in terms of labor and social protection in the future for the workers in the industries of these two countries. It is under these rapidly changing and trying circumstances that the evolving needs of factory workers and homeworkers must be assessed, together with the prospects for their gaining access to new forms of social protection. It is clear that new policies will be needed to deal with potentially rapid declines in labor-intensive industries in the two countries. Moreover, as formal jobs decline and workers — mostly poor women workers — are left with increasingly precarious employment and insufficient income, the need for access to different forms of social protection will grow dramatically. Policy makers, as well as trade unions, N G O s , CBOs, religious organizations and others, are starting to recognize this need for new, wide-ranging initiatives regarding social protection, and the m o m e n t u m for change in b o t h countries is growing. The regulatory environment in Thailand & the Philippines T h e regulatory environment of these two countries may initially appear to he very different. However, important questions relating to the possibility of enforcing existing legislation in both countries indicate that this may not be so. In addition, b o t h countries are faced with the question whether policies and practices could, at times, be a substitute for formal legislation. 67 Thailand Thailand has not yet approved of half of the Fundamental ILO Conventions. However, the new Constitution adopted in 1997 does move in the right direction with respect to education, employment, gender equity, income equality, labor protection, social security and other key areas of concern. Moreover, the new Labor Protection Act of 1997 is intended to improve working conditions for formal workers, including spelling out the rights of women, child and migrant workers. T h e labor protection and social protection laws that favor formal workers have not yet been extended effectively to informal workers but a few steps have been taken in that direction. For example, in principle, social security benefits should have been extended to all establishments with one or more employees by April 2002. Also, a number of projects have heen initiated by various departments of the national government to help informal workers, and, in general, the current government of Thailand has shown itself to be Thailand has a low union density and it is estimated that the present rate of unionization is only around three percent of the formal workforce. T h e present government is seen as more encouraging of labor organizations than previous governments. Philippines In the Philippines, the successive national governments of recent years have adopted almost all of the Fundamental ILO Conventions. Since 1992 specific rights of homeworkers have been recognized. T h e question in the Philippines is not so m u c h the existence of progressive labor laws as their enforcement. For decades trade unions have been considerably stronger in the Philippines than in Thailand. T h e unionization rate is higher and unions are active. T h e present government of the Philippines is also, in principle, supportive of b o t h labor organizations as well as employers' organizations. Various branches of c h u r c h organizations, along with N G O s , political organizations and other secular organizations, have also been active in the labor rights movement in the Philippines and, as in Thailand, these organiza tions often act in an important watchdog capacity. More will be said about the regulatory environment in the case studies below. BoxzyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA 6: The difficulties of enforcing labor laws An i n t er vi ew w i t h a m anager in a relat ively l o w profile firm in t he Philippines t h at makes b ot h gar m ent s and t ex t iles (in different d i vi si ons) offered an int er est ing perspect ive on law enf or cem ent . To cut cost s, wor k er s are of t en required t o put in ex t r em ely long wor k hours at l ow pay (for ex am ple, five drivers m ust do t he j ob t h at nor m ally w o u l d take 10 drivers, and t h ey have t o wor k 1 2 ,1 8 or, on occasion, up t o 20 hour s st r aight if necessary t o get t he j ob done). This also applies t o t he young, fem ale garm ent wor k er s (as wel l as t he m ale managers and ot h er s). It is possible t o dem and t hi s am ou n t of over t im e because, in a sit uat ion of wid esp r ead p over t y and a ver y t h i n j ob m arket , t here are al ways ot her s wh o are wi l l i n g t o do t hi s t yp e of wor k if som eone refuses t o do so. Garm ent wor k er s and ot her em ployees in t hese f act ories are not unionized, and t hey do not receive m i n i m u m pay. They have no benef it s (t h e m anager says t hat t hey have t oo lit t le incom e t o w an t t o con t r i b u t e t o social secu r i t y). Moreover, t o avoid labor laws, wor k er s are hired for five m ont hs, are laid off for t w o week s (t h ey act ually wor k , but t he books reflect t hat t h ey have been paid of f ), and are t hen rehired for five m ore m ont hs. In Thailand, according t o a Labor Force Survey, t h e percent age of wor k er s in sm all t o m edium ent erprises w h o report ed being covered by labor p r ot ect ion l aws ranges from nought percent — especially in sm all ent erprises — t o ab ou t 43 percent in mediumsized ent erprises, even t hough legally t hese wor k er s are sup p osed t o be covered. The percentage w h o report being covered by labor p r ot ect ion l aws is closer t o 100 percent for large ent erprises, alt hough t here is also evid ence t hat wor k er s in at least som e of t he large ent erprises m ay report com p liance w i t h l aws w h en , in fact , t he laws are not being f ollowed. For t hese reasons, it m ay be t oo early t o k now w h at is t yp ical of t he garm ent ind ust r y in Thailand or in t he Philip p ines. However , t he dif f erence b et ween t he ex ist ence of laws and t he enf or cem ent of l aws needs t o be kept clearly in m ind. 7° Part 2 The Philippines social protection study SO CIA L PROTECTION FOR FORMA L A ND INFORMA L WORKERS IN THE PHILIPPINES T h e Philippines Social Security System (SSS), w h e n grouped together with the Government Security Insurance System (GSIS) for government employees, is said to cover up to half of the total workforce. Both the SSS and GSIS programs are mandatory for formal workers in the public and private sectors and are, in principle, open on a voluntary basis to informal workers. T h e Philippine Constitution and Labor Code make it clear that social protection should, by law, apply equally to both formal and informal workers. However, in reality, the great majority of informal workers do not participate in the SSS. T h e SSS gives cash benefits for retirement, death, disability, maternity, illness and old age. T h e r e is also a program covering work-related injuries, but this is only open to workers with clear employer-employee relationships since the employer is required to make contributions. Finally, the PAG-IBIG Fund (Home Development Mutual Fund) serves as a source of low-income loans and loans for disasters, emergencies, housing and education, although in practice this usually serves as a provident fund with payment upon retirement, death, disability or emigration, or after contributions have been paid continuously for 10 to 15 years. 71 Regarding medical benefits, these are offered to all workers registered with the SSS, and are administered through the Philippine H e a l t h Insurance Corporation (PHIC or PhilHealth). Informal workers are, in principle, able to join on a voluntary basis either through the Individually Paying Program (IPP) or the Indigent Program (IP) — the former if they make at least $19.50 (P1000) a month. 1 However, those w h o make less t h a n $19.50 a m o n t h or who have n o t registered their enterprises (and who do not qualify as 'indigent') are without even the possibility of voluntary participation. T h e SSS also lacks an effective mechanism for collection, so even the informal workers who initially join the SSS and PhilHealth programs often let their coverage lapse. As a result, one study estimates that only 3.8 percent of selfemployed (and informally employed) workers were registered with the SSS, and there is a perception even among formal workers (under compulsory membership) that there has been a 'clear lack of enforcement and compliance monitoring'. Instead, informal workers are m u c h more likely to t u r n first to families, other relatives, friends and communities to meet their needs, even though they will not be able to respond to all needs when there are serious problems. Some local community-based organizations and some local governments have developed savings-based loan programs, health care, d e a t h or funeral benefits and other programs. As expected, some of these have been more successful t h a n others, hut they have significant weaknesses as well, such as the limited size of membership, the lack of technical expertise and a lack of information dissemination. ' p 51 = $ 1.00 in April 2003 FIRST CA SE STUDY: LA RGE-SCA LE FA CTORY PRODUCTION FOR EXPORT In the Philippines, many of the manufacturers-exporters who survived the 1997 financial crisis cater largely for the US quota market. Figure 2 is an example of a value chain involving ABC, a Filipino-owned firm, that supplies JKL, a giant marketer-merchandiser-manufacturer in the US. A B C has adjusted to the declining trend in the garments export market by downsizing its formal workforce and by relying on a host of subcontracting enterprises to meet its orders. This value chain in focus zyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA JK L JKL is a $2.3 billion multi-divisional marketer, merchandiser and manufacturer. It claims to be the biggest private clothing supplier in the US, with eighteen domestic and foreign divisions producing and marketing mainly clothes for women but also juniors', kids' and men's wear as well as camping gear. It claims to have '26 000 associates worldwide', and services more t h a n 16 000 retailers, from discounters to department stores. It has its own manufacturing facilities and more t h a n 700 foreign and domestic contractors. JKL, in this case, is the principal company, which subcontracts work out to other enterprises. It has its own code of conduct, which it expects these enterprises to zyxwvutsrponmlkjihgfedcbaZYXWVUTSRPONMLKIHGFEDC comply with, in addition to requiring them to comply with the laws of the host country regarding wages and working hours. JKL proscribes forced labor and child labor and requires its subcontractors to maintain acceptable health and safety standards, and insists that there should be n o discrimination and no physical or mental punishment. JKL supplies A B C with the samples, the cloth and other raw materials, and pays ABC $2.18 per dress for labor. Price tags o n the samples show that the dresses sell from $18 to $24 each. ABC ABC is a 15-year old manufacturer-exporter, mainly of women's wear, based o n the outskirts of M e t r o Manila. It is a 100 percent Filipino-owned corporation that began by catering to the domestic market. It has a formal workforce of 144 and hires 80 agency workers. Since the late 1990s, A B C has resorted more and more to subcontracting to smaller garment firms, some of which are directly linked to A B C . These now total 38. ABC is one of the top 220 Philippine exporters. It is reportedly exporting to many countries, but as far as the workers know, it mainly supplies JKL in the United States. T h e company is currently not in good financial shape, and reportedly has drawn big loans with a number of banks. The enterprises that A B C subcontracts to, and the numbers of their workers, are shown in Figure 2. ABC pays its subcontractors roughly $0.40 for the labor cost of each dress. Of this, only 50 percent goes to the sewer or operator; 50 percent goes to the subcontractor for overhead expenses and personal gain. So if several workers make the different parts and then put together the entire dress, they must divide up the $0.20 for each dress amongst themselves, with the subcontractor also receiving $20. At its final destination, the same dress sells for $18 - $24. ABC lends out sewing machines and does n o t exact rent if these machines are used exclusively for A B C orders. A B C maintains a pool of quality control personnel wh o m a k e daily rounds of its suppliers to make sure that export standards are met. 74 The formal workers in ABC: how they handle risks A B C employs 144 formal workers, 18 of whom have supervisory positions. There are 32 workers doing sewing, of whom only five are m e n . O t h e r women are in the sampling, trimming, revising and finishing departments. T h e r e are 30 other men, mostly doing cutting, warehouse work and other activities. The role of the union T h e formal workers are members of a union affiliated to a progressive federation, which has raised b o t h their class and gender awareness t h r o u g h seminars and other educational activities. T h e union has negotiated a new collective bargaining agreem e n t (CBA), which provides, among other benefits, for a cost of living allowance and a wage increase in the third year. All formal workers of A B C are members of the Social Security System (SSS), the Philippine H e a l t h Insurance Corporation (PhilHealth), to which their contributions to Medicare unde r the SSS were automatically transferred, and PAG-IBIG (a housing f u n d ) . A t the height of the financial and economic crisis, m a n a g e m e n t stopped remitting payments to these institutions. However, A B C has now promise to complete the payment of arrears. Protection for formal workers Under the SSS, PhilHealth and a new collective bargaining system, workers are entitled to the following benefits and protection: • Sickness • Maternity and paternity • Disability • Calamity and emergency • Death a Retirement • Job and union security • A healthy and safe environment. Accessing benefits from local government Some of the workers are voting residents from low income areas of the city in which ABC is located, and they also have blue cards associated with the programs of the current mayor. These cards entitle them to emergency hospitalization and medical benefits up to US $490. Some workers are able to access maternity benefits from the local government through the D e p a r t m e n t of Social Welfare and Development (DSWD), which refers pregnant women from low-income families to lying-in centers and accredited hospitals where they are able to deliver their babies free of charge. T h e D S W D also implements the burial assistance program of the city government, which entitles indigents to about US $137. Agency workers: no formal protection In the A B C factory itself, there are 80 agency workers, only five of whom are men. They are hired to A B C by 3R Garments C o n t r a c t o r and Services. A n A B C manager operates the agency, and the workers are o n the payroll of 3R Garments. If agency workers meet the quota of 800 units a day, they get the full wage of $4.90. However, they are n o t given as m u c h work as they could potentially do because of the amount of waiting time and weak supervision. Sometimes the loading is just 600 units, and even this has to be shared with one or two other workers. As a result, most agency workers do not meet quotas and earn as little as $1.96 to $2.35 a day doing ironing, sewing and other piece jobs. 76 Agency workers d o not have any social security benefits and have to work for a maximum of six months, after which they are replaced with a new batch of workers. Some are laid off without even a day's warning. W h e n they have an emergency, they either approach their employer for a cash advance or rely o n their network of relatives, neighbors and close friends. At the end of February 2002, agency workers no longer reported for work at A B C because of the seasonal decline in orders. They can apply to the agency to be deployed elsewhere, but many will be without work during the lean season. Subcontracted workers: a few are luckier than most Subcontracted workers face varying and complex working conditions. M u c h depends on the location of the work, on whether lodging is provided and on how m u c h workers pay for this. Employers generally have to get permits from the local government and the Garments and Textiles Export Board (GTEB), which require them to comply (even if just on paper) with current rules and regulations, such as registration of their workers with the SSS. ABC Annex, which is an informal, unregistered, subcontracting project of A B C zyxwvutsrponmlkjihgfedcbaZYXWVUTSRPONMLKIHGFEDC management, ostensibly owned and r u n by the current cutting manager, is located on the first floor of the A B C factory itself, employing sewers of between 26 and 49 years of age. T h e workers apply to A B C itself and are tested by A B C supervisors for their sewing and other skills. They earn a low of $15.70 a week plus overtime, and a high of $35.30 a week plus overtime. This is better than the agency workers in the same building, but like the agency workers they have n o social security benefits. At the end of February 2002 the A n n e x workers, like the agency workers, n o longer reported for work in the main factory but were transferred to V M G Garments. These workers are not totally unprotected, and some of t h e m are also voting residents of the city, and so have the blue cards associated with this particular mayor's programs. VMG Garments employs about 100 workers on a piece-rate basis. They earn from $2.35 to $3.33 a day. Most of them are live-out, but 30 live-in workers pay $17.26 a m o n t h to m a n a g e m e n t for their board and lodging. Management enrolled many of the workers in the Social Security System (SSS) but contributions to the SSS have not been sustained. Kerwin Garments employs 52 workers who arc o n a piece-rate basis. They earn between $ 15.70 and $39.22 a week. Those who are live-in get free lodging and water, but they contribute $0.78 a m o n t h for electricity. Some of the workers have been working there since 1995 b u t enjoy n o benefits. The 16 3G workers are all live-in workers, ranging in age from 18 to 44 years. Their length of service ranges from one m o n t h to six years, and wage rates (with overtime) are from $5.88 to $58.82 a week. T h e y enjoy n o social security benefits. The six workers in L M N Garments are members of the SSS and PhilHealth because the owner's husband works at the SSS Inspection Division. Workers have the SSS and PhilHealth benefits, and enjoy free housing (including water a nd electricity) and free rice. Even during the slack season, the employers ensure that their workers have work by looking for orders beyond A B C . SECO N D CA SE STUDY: HOME-BA SED EMBROIDERY FOR EXPORT T h e town of A n g o n o in Rizal province is well k n o w n as a hand-embroidery center. Many of the embroiderers are concentrated in Barangay San Vicente, where P A T A M A B A , a grassroots organization working to support workers' rights, has 38 members. The value chain in focus Gloria Bularin has been doing smocking since the 1950s. She is now the coordinator of the P A T A M A B A Barangay chapter in San Vicente, Angono. She has been a subcontractor for many years, giving jobs to as many as 20 homeworkers at a time during the peak period. Bularin supplies Marisol Ugarte, who used to do smocking herself. Her business is registered as a single proprietorship at the D e p a r t m e n t of Trade and Industry (DTI). At the peak of her business, she gave orders to about 50 subcontractors like 79 Bularin. She was directly accepting orders for embroidery work from big export firms as well as small subcontractors manufacturing linens, lingerie and infant wear. Her income improved so m u c h that she was able to send all her children to college and to put up a small retail shop. However, business declined in the 1990s. Ugarte takes orders from Jose Ricarte of Ricarte's Garment, a small workshop that has 30 live-in workers. It is registered with the Securities and Exchange Commission (SEC) and the D e p a r t m e n t of Trade and Industry. Ricarte's Garment sews and assembles garments for Prana, an exporter of Indian origin who runs a marketing and distribution office. Prana supplies Ricarte's G a r m e n t with cloth, and Jose Ricarte and his family and workers do the cutting and sewing. They subcontract the embroidery to homeworkers through Ugarte and others like her. Prana pays Ricarte's G a r m e n t $0.59 per completed piece (cut, sewn and embroidered); Ricarte pays Ugarte $0.10 per embroidery line; Ugarte pays Bularin $0.06; Bularin pays her homeworkers $0.04. Diana Juan supplies Carol's, one of the biggest retailers of children's wear in the country, where baby dresses with h a n d embroidery sell from $6.86 to $9.80 each. Juan's set-up is like Ricarte's, with live-in workers doing straight sewing and homeworkers doing the smocking through subsubcontractors such as Ugarte. Juan pays Ugarte $0.03 per embroidery line; Ugarte pays Bularin $0.02 per line; Bularin pays her homeworkers $0.01 - $0,015 per line. Workers doing straight sewing: formal protection as a minority choice T h e following are the characteristics and working conditions of Ricarte's 30 inhouse workers doing straight sewing: • They range in age from their mid-twenties to their forties. Some are married. • They are mostly migrants from the provinces who go home to their families about every three weeks. • A few have been with Ricarte since the 1980s; the rest have been there a shorter time. • T h e y are paid piece-rates, with peak earnings at about $35.29 a week, and the lowest earnings at $11.76 a week. B T h e y contribute about $2.75 a week for their food, b u t they get free lodging. • Only 12 are members of the SSS. T h e rest, although given the choice by Ricarte, opted n o t to be members because they would rather hold on to their money t h a n use it for the contribution. • N o one is a member of PhilHealth, because the contribution is too burdensome, PhilHealth-accredited hospitals are too few, and benefits are too small and difficult to collect. • T h e workers also have a rotating savings and credit associationywvutsrponmlkihgfedcbaTPECBA (paluwagan) to which they contribute $1.96 a week, and from which they can draw $58.82 w h e n it is due. Bularin's homeworkers are her daughters, her neighbors and co-members of P A T A M A B A . T h e y are at the b o t t o m of the chain and have n o formal access to social security coverage as employees. In 2001, subcontractors like Ugarte together with their homeworkers attended a forum with SSS and PhilHealth representatives. Ugarte was willing to provide the employer's contribution, but this would m e a n taking more for herself from the piece-rate given to the homeworkers. T h e latter said they would rather hold o n to their already meager piece-rate, so nothing came out of the discussions. It seemed more feasible to explore the SSS membership as self-employed individuals, which some of the homeworkers t h e n did. Social protection actions and recommendations: PATAMABA Some of the actions and recommendations of P A T A M A B A regarding social protection for informal workers are as follows: • T h e accreditation of N G O s with viable schemes, in partnership with banks and other financial entities, to serve as collecting mechanisms for the SSS among the sectors the latter c a n n o t reach. • A reduction in the initial contributions to PhilHealth, with three m o n t h s as a required minimum. • P A T A M A B A has a savings mobilization program, in which each member sets aside a minimum of $0.39 a week. This amounts to between $17.65 and $23.53 by mid-December w h e n they draw their savings for Christmas. T h e plan is to raise contributions to $0.78 and to set aside the extra $0.11 for the SSS contributions, or to pay to register as self-employed workers. • The possible enrolment of workers in the Workers' Mutual Benefit Assistance (WMBA) fund (set up by a private insurance company in cooperation with a trade union centre), which provides d e a t h benefits, hospitalization, sickness and disability benefits. • T h e possibility of accessing micro-finance services offered by the A n g o n o Credit and Development Cooperative ( A C D E C O ) . This would require becoming members of A C D E C O , which offers benefits in case of death of the member, his or her spouse and minor child; perpetual use of burial space at far below market rates; disability and pension benefits for those above 65; and free medical, dental and optometric services. To be members, they have to pay $ 1.96 for the pre-membership seminar and $1.96 for the initial share in the m i n i m u m $58.82 subscribed capital, payable w h e n possible. 82 • Enrolment in the Philippine National Red Cross (PNRC), where members can access social protection in the form of $235.29 accidental d e a t h benefit, and $2.94 a day hospitalization benefit (in case of accidents) for 60 days, with just a $0.59 yearly contribution. • PATAMABA's response to declining embroidery orders is to give their members training and start-up capital for an alternative livelihood. In addition to these, there are schemes and services from which b o t h organized and unorganized homeworkers can benefit. Both can be part of indigenous social protection schemes such as theywvutsrponmlkihgfedcbaTPECBA paluwagan, the rotating credit and savings association already mentioned, and damayan (community assistance to aid a bereaved family). Both can benefit from services provided by local government institutions. Those who are hospitalized in the Angono General Hospital, which is run by the provincial government of Rizal, can get 50 percent discount on the billing statement if proven to be in need by the hospital's social service department. If they still cannot afford the bill, they can approach the Municipal Social Welfare and Development Office ( M S W D O ) , which can shoulder the remainder through the disbursement of municipal funds. Medicines can also be provided through the health centers, through donations of sample medicines from private hospitals, and/or special arrangements with a private drug store. Pregnant homeworkers usually save up for their deliveries, b u t if they are in financial need, the A n g o n o General Hospital can deduct from the usual cost of about $9.80 to $19.61 per delivery. T h e truly indigent can approach the M S W D O , which can decide to defray the total cost. In the case of death in the family, the municipality can provide a maximum a m o u n t of $19.61 as burial assistance, and offer (through the mayor) a discount in the municipal cemetery. SUMMA RIZ ING THE IMPLICA TIONS OF THESE CA SE STUDIES From these two case studies, the following conclusions can be drawn: • Unionized formal workers are the most protected, although increases in subcontracted work undermine the power of unions. • Codes of c o n d u c t may strengthen or weaken the bargaining power of formal, unionized workers with management, depending o n how the former resolve the dilemma they face o n the issue. If, for example, A B C was to tell the JKL auditors about its violations of the code, it would get no orders and workers would be out of a job. • Agency and subcontracted workers have varying vulnerability: employers can enroll a minority of subcontracted workers in the SSS. T h e problem, however, is the inability of m a n a g e m e n t to sustain contributions, especially w h e n orders are low. Agency and subcontracted workers without the SSS benefits and entitlements provided by local governments are the most vulnerable. • Many of the formal, agency, and subcontracted workers who are voter-residents of low-income areas in these centers are able to get discounted hospitalization, medical, maternity and death benefits from the local government or from schemes established by former local officials. • In terms of the gender and life-cycle approach to social protection, older w o m e n of reproductive age who are not formal workers, are not SSS members or local government card holders, and who are the main breadwinners or sole parents are extremely vulnerable to risks. • Homeworkers, who are worst off, access protection through community action. They can also access assistance from the provincial government (through the A n g o n o General Hospital) and the municipal government (through the Municipal Social Welfare and Development Office) in case of emergency hospitalization, childbirth, d e a t h and calamities such as floods. • There are non-governmental sources of social protection the homeworkers can tap into, like the trade union-led Workers' M u t u a l Benefit Assistance (WMBA) Fund, the A n g o n o Credit and Development Cooperative ( A C D E C O ) and the Philippine National Red Cross. • Homeworkers' initiatives such as their savings mobilization program and their group enterprises could also be sources of social protection if they are developed further. T h e organized homeworkers have more access to social protection, and have the possibility of expanding this access because of their networking abilities at the community and other levels. 84 Part 3 Thailand social protection study A description of the garment industry in T h a i l a n d and the regulatory environment as it applies to garment workers has already been described in the Introduction. Part 3 deals specifically with social protection for formal and informal workers in Thailand. GOVERNMENT SPONSORED SOCIA L PROTECTION Regarding government-sponsored social protection in Thailand, the following provides a brief overview of what is actually a complex set of conditions, with variation throughout the country: • T h e formal social insurance program in Thailand, administered by the Social Security Office (SSO), has been changing and expanding in recent years, with benefits increasingly being extended to smaller enterprises and informal workers. • T h e program covers sickness, maternity, invalidity, d e a t h and survivor grants, maternity benefits for 90 days, old age pensions and child allowances. In the late 1990s and early 2000s this program covered only about 15 percent of the workforce and mostly formal workers. It may cover a larger percentage now, as compulsory participation was extended to establishments with one or more workers in April 2002 (and will finally be extended to the agricultural, fishery and forestry sectors in succession). Implementation has been a problem. 85 • Apart from the contributory S S O scheme and additional programs covering pensions and health care for civil servants, the T h a i government has social assistance programs for targeted groups, voluntary subsidized health cards for those n o t covered by the S S O program and labor protection laws. • Social assistance programs include: cash benefits for the poor, the elderly without means of support, victims of disasters, and other programs; credit; training for people with disabilities, and other targeted groups; in-kind transfers, such as school lunches, milk, scholarship and loan programs; and free medical care for low-income families. • A number of job creation programs have also emerged in the wake of the financial crisis, although many of these have now been discontinued. The T h a i government aims to provide universal health coverage within 10 to 15 years, and the current government instituted a '30 Baht Health Scheme' to begin moving in this direction. Other immediate goals include expanding social security to more effectively cover older persons, informal workers, farmers, the self-employed and homeworkers, and to understand risks and vulnerabilities so as to respond more adequately, particularly in the case of vulnerable groups. 86 INFORMA L A CCESS TO SOCIA L PROTECTION Informal methods of accessing social protection include the following: • A great n u m b e r of local schemes, sponsored by occupational groups, CBOs, and other civil social organizations, have arisen in recent years. T h e need is to make these part of an integrated and sustainable system that allows effective access to social protection for all. As an example, H o m e N e t North, a network for self-employed informal workers and subcontracted homeworkers in Thailand's n o r t h e r n provinces, has been negotiating with a private insurance company for the benefit of the self-employed members, although nothing has been decided as yet. • Family and friends, along with community organizations, remain the first line of defense for most informal workers in Thailand. T h e King's philosophy of development, reflected in the current (2002 - 2006) N i n t h National Economic and Social Development Plan, sees the government as playing a key role that strongly supports, but does not exclude or take the place of, family and community-based ties. T h e idea is to strengthen these informal ventures, and t h e n ultimately arrive at an effective mixture of formal and informal approaches to social protection, bringing in a wider range of groups and organizations, potentially including government bodies, employers, unions, occupational groups, CBOs, N G O s and other civil society organizations. This will be important as a way to respond to different types of contingencies, particularly those faced by the most vulnerable groups in society. FIRST CA SE STUDY: L A R G E- S C A L E FA CTORY PRODUCTION FOR EXPORT This case study focuses on the GFB Company, and the BVS Company that supplied agency workers to the GFB factory (see Figure 4). GFB The factory and offices of GFB are situated in Bangkok. GFB produces and exports lingerie for women to a variety of customers in overseas markets, including the USA, Europe and Canada. These customers produce their own designs and give their orders to GFB for production. The company has been registered in Thailand since January 1985. Its shareholders are all Chinese businessmen from Hong Kong. Two prominent Thai nationals are represented as the company's consultants. Presently, the company makes use of a bonded warehouse arrangement under the Board of Investment program to obtain tax exemptions for imported raw materials that will be used for export purposes. GFB is one of the biggest factories in the area of Bangkhen District in eastern Bangkok. In 2001 the company employed 1 480 workers, 100 of whom were m e n an d 1 380 women. Of these, 65 men and 130 women received a monthly salary, and 41 men and 1 244 women received remuneration based on daily wages. Of these daily wage workers, 985 were formal workers (who have access to benefits associated with formal full-time employment), and 300 were agency workers, supplied by the BVS Company. T h e production line is comprised of six operational units including cutting, stitching, quality control, mold making, maintenance and packing. T h e factory produces lingerie for various brands for different markets such as K-Mart, G A P BODY, La Senza, Sensual Cacique, Playtex, Liz Claiborne and Victoria's Secret. All of these brands have codes of conduct. T h e production of lingerie requires highly skilled labor, particularly special sewing expertise. All of the raw materials are imported. T h e workers need to be trained for many years, and most have been working there for six to ten years, and some for even longer. GFB and the trade union T h e r e have been serious disputes between the company and the workers since 1992 in terms of paying below minimum wages and failing to comply with the social security system. T h e workers went on strike and submitted their grievances to the company. W i t h the strong support of an N G O (Arom Pongpangant Foundation), the GFB workers' union was registered in January 1994. T h e trade union has been successful in negotiating with the company to improve working conditions and other benefits. These benefits, as reported by the trade union, include cost of living increases, bonuses and provision of transportation to workers. In addition, the company has agreed to pay $200 (10 000 baht) 2 a year as a contribution to support the trade union's activities. W h e n the trade union was registered in January 1994, about two-thirds of the total 15 000 workers applied for membership. All 13 committee members designated to work for the union were women. Social insurance and other benefits of formal workers In compliance with the Social Security A c t administered through the SocialzyxwvutsrponmlkjihgfedcbaZYXWVUTSRPON Security Office (SSO), the formal workers of the GFB Company are provided with health benefits, cash for sickness, maternity, invalidity, death, old age and child allowance. 2 US $1.00 = 50 baht in April 2003 Moreover, under the recent working agreement (that will remain in effect from October 2001 to O c t o b e r 2004), the factory will provide a n u m b e r of other benefits for its formal workers, including those shown in Table 7. Table 7: zyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA Benefit s provided for t he form al workers at GFB Benef it s D et ails 1. Bonus A bonus wi l l be provided t o wor k er s w h o wor k w i t h o u t t ak ing leave over t he cour se of t he year. The am ou n t received is calculat ed from t he daily wag e of each wor k er m ult iplied by 25 days. 2. Vacat i on or leave The vacat i on or leave of wor k er s includes 30 days sick leave a year and I 3 days for vacat i o n a year. 3. Decent wor k al l owan ce The al l owance wi l l be given t o t he work er w h o wor k s for a m on t h w i t h o u t t ak ing an y leave and w i t h o u t being lat e. 4. Sur vivor benef it The sur vivor s of a dead worker, including parent s, husband/ wif e or children, receive $ 5 0 0 cash. 5. Yearly wag e increases Af t er wor k i n g for one year, t he daily wag e of each wor k er wi l l be increased based on a perf orm ance evaluat ion (a 5- level r at ing syst em based on t he f ol l owi n g crit eria: efficiency, pr oduct ivit y, and am ount of t im e wor k ed ). 6. Cost of living al l owan ce Each wor k er wi l l receive $9 a m on t h t o assist w i t h increases in t he cost of living. 7. Food al l owan ce Each work er wi l l receive $4 a m on t h for food ex penses. 8. Product ion t arget reward The reward w i l l be given t o t he wor k er s w h en t heir p r od uct ion m eet s t he t arget s of each line/ unit . In spite of these benefits, formal workers feel very insecure in the company, and layoffs have been increasing. In 2001, under a new management team, the company laid off 400 formal workers, reducing the n u m b e r of formal workers to approximately 1 100. T h e company claimed that due to constant losses because of the high degree of competition in the garment industry, and also because of the sharp decline in orders from the US, one of •ts main customers, it needed to restructure by downsizing the workforce. T h e formal workers in the company are currently working under these uncertain conditions, and some feel pressured to resign from the union. It is thought that the company is plani n g to move its production unit out of Thailand, and it has already built a factory in Cambodia. The BVS Company and its agency workers T h e conflicts between GFB and the union led to several appeals in the labor court. In the view of union workers, the union is under attack and the company has been using a n u m b e r of different tactics in its attempts to weaken it. For example, some of the union workers were laid off, which added more pressure and tension at the workplace. In response, workers protested by not working overtime. T h e company then claimed to have incurred serious losses from the workers' protests, and asked the BVS Company to bring in agency labor to work in the factory. T h e BVS Company registered in August 2001 as a company that supplies security guards as well as labor on a short-term basis. It has a registered capital of $200 000, and it has signed a working contract with the GFB Company to supply workers to sew lingerie in the factory for six months. T h e BVS Company is currently supplying 300 agency workers to GFB. All of these are women. T h e y work on the same production lines of the sewing unit alongside other formal workers in the factory. Risks and vulnerabilities for workers in BVS T h e BVS Company recruited workers by putting a table in front of the GFB Company so that all applicants wanting to work at GFB had to pass the table and sign a working agreement paper with the BVS Company. This agreement included the following provisions: • A n eight hour working day • A m i n i m u m wage of approximately US $3.84 a day • A possible skill allowance of $0.12 a day H A possible 'decent work allowance' of $6.70 a m o n t h (based on certain criteria) • Overtime payments of $0.70 per hour • A compulsory uniform that includes a white shirt, which has to be purchased from the company for $3.26, and white sports shoes. If the worker does not wear the company uniform, the company will n o t pay the daily wages of that day, and will deduct $1.51 from the wages of the following day. • These agency workers cannot organize themselves as a union, or join the GFB workers' union. Other working conditions that apply are: • U p o n employment the applicant must pay $23.26 in cash, or it will be deducted from wage payments at a rate of $3.49 a week for six to seven weeks. This payment is returned after six months' service (with an advance notice of 15 days). In the event that a worker resigns before six m o n t h s is completed, the company retains the last a m o u n t of the wage payment or whatever amount is necessary to make up the balance of $23.26, with the company keeping the $23.26. • To obtain pay for sick leave, workers must submit a letter from a public hospital confirming the illness. In the case of submission of a letter from a private hospital or clinic or if there is n o letter, wages are n o t paid to the worker for that day. Moreover, a penalty fee of $1.51 is deducted from the wages of the following day. • A contribution of $1.74 a fortnight, or between $2.79 and $3.48 a month, is deducted for social insurance (through the S S O ) . The agency workers interviewed for this study expressed their unhappiness with their contracts and working conditions. For example, the decision to pay the decent work allowance was based solely on personal judgement and not objective criteria. Also, they felt that the payment required for the uniform and shoes for working was a burden and they should be provided by the company, just as they are to formal GFB workers. Workers complained that it was illegal for the company to collect any guarantee fund. They also pointed out that in spite of contributing to social insurance, they did not receive any social insurance card and could not qualify for social insurance benefits. According to the district Social Security Office, the company had not remitted their share. To rectify this workers would have to take the matter to an appeal committee or to the Labor Court. In the view of the formal workers, these agency workers were being used to undermine the union within the GFB Company, despite their lower productivity. In this case, evidence of the f u n d a m e n t a l weakness of the position of the agency workers can be seen in the company's failure to make the required payments into the social insurance fund, and in its violation of labor regulations. It should be noted, however, that n o t all companies behave in this way, and some even pay more t h a n the minimum wage and minimum legally required benefits. It may be too early to say what the n o r m is in the garments industry in Thailand, as well as in the Philippines. 93 SECO N D CA SE STUDY: H O M E-BA SED PRODUCTION FOR LOCA L A ND EXPORT MA RKETS zyxwvutsrqponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA The value chain T h e C F H Company (see Figure 5) is located in the n o r t h e r n part of Thailand, and is well established and has been in textile and garment production for over 20 years It currently produces such commodities as jackets and women's clothing for middle level markets in Europe, mainly for France. T h e company has its own factory where the main production units are operated. T h e production process is made up of four units: cutting, sewing, quality control and packing. T h e r e are currently 250 workers in the factory; most of whom are women and many of whom come from nearby villages. T h e formal workers in the factory receive welfare and social insurance benefits (through the SSO) in accordance with labor regulations. T h e other benefits provided to the workers include bonuses and a decent work allowance as a reward for uninterrupted attendance at work and punctuality. T h e r e was a case of a worker who had worked at the factory for 15 years and so received a gold chain as a special bonus. T h e workers in the factory are normally required to work overtime. Subcontracting to groups at the village level CFH used to outsource work to a number of villagers' groups in the area, b u t zyxwvutsrponmlkjihgfedcbaZYXWVUTSRPONMLKIHGFEDCBA claimed that this was not done any more due to the decline in orders. Aside from this, because of the changes in patterns and styles of cloth, the factory manager said that it would be risky to use the homeworkers, as they would have to be trained and monitored to make sure they learned the new styles. H e said that the company was losing orders to Vietnam and China, which offer about 30 percent lower costs. Subcontracting group: Makuejae sewing group (Anong's group) Anong, a 45-year-old w o m a n who has engaged in subcontracting work for more than 10 years, manages a homeworker group of 15 group members working at a small workshop located in the Makuejae sub-district of Lampoon province. A n o n g has registered her small workshop as a homeworker group with the provincial labor welfare office under the Ministry of Labor and Social Welfare. She has been given recognition by the local authorities for her charitable work, as she helps train young women in the village in sewing skills. These w o m e n need training before applying for factory work. T h e Lampoon Industrial Zone is located nearby, and Anong's workshop has become well-known for offering apprenticeships to young women i the area. A n o n g has never considered herself an entrepreneur. At the workshop, the workers own most of the sewing machines, and local government offices have donated some. To obtain the costly sewing machines, the workers have requested a loan with low interest rates from a local government office, which they will pay back on a monthly basis. T h e group receives orders from C F H to sew parts of garments, and some individuals in the group produce entire garments on an own-account basis. In the first years, the orders from C F H were the group's main work due to their limited equipment and a lack of capital funds to buy the raw materials. During that time, the company provided training in different sewing techniques in order to meet the high quality control standards for exported products. In the last three to four years, however, the group has received job contracts to produce uniforms from the factories in the Lampoon Industrial Zone and, for the past year, has completely stopped receiving orders from the C F H Company. T h e 15 workers in the workshop have been working for six to ten years. Their ages range from 35 to 50 years. Most of t h e m are married. T h r e e of t h e m used to work in a factory, but have decided to work with A n o n g mainly because it provides flexible time for t h e m to participate in other activities in the village. Working conditions T h e following working conditions apply in this small workshop: ® A nine-hour working day • Wages: $2.79 a day, except for the worker helping in finance who gets $3.02 a day • Overtime rate: $0.28 - $0.30 per hour a T h e r e is n o formal leave or vacation, but workers c a n submit a verbal request in advance for a few days leave. They do not receive wages for the days when they are o n leave. T h e request for leave during seasonal farming is a normal practice of all of the workers. A n o n g has to manage the production schedule effectively to ensure that the work will be produced and delivered o n time. SometimeszyxwvutsrqponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA workers f r o m the workshop go b a c k to their village, organize a group of seven to t e n m e m b e r s a n d subcontract work f r o m A n o n g . T h e s e former workers of A nong' s have b e c o m e an efficient network, a n d c o n t i n u e to receive orders f r o m Anong. In addition, some workers have h a d to quit working in the workshop itself due to household responsibilities, and now work o u t of their o w n homes. Currently, Anong has s u b c o n t r a c t e d work to three groups a n d seven individual h o m e w o r k e r s living in a village nearby. Social protection Anong and h e r group decided to register with the social insurance f u n d (under t h e SSO) in 1999. A n o n g ' s son, w h o is a m e c h a n i c a n d runs his shop near A n o n g ' s premises, has registered as t h e employer. T h e two contributory parts to the S S O (that of the 'employer' a n d the 'employee') c o m e from the central fund of t h e group and are d e d u c t e d from the income of the workers at $3.72 a m o n t h . T h e benefits of social insurance include h e a l t h benefits, maternity, invalidity, death, old age a n d a child allowance. T h e workers are quite happy w i t h these benefits. The Banthi subcontracting group The Banthi sewing group is a group of 10 m e m b e r s working together in a small workshop. To start subcontracting work, the group first borrowed sewing m a c h i n e s from A n o n g . Later, they received an interest free loan of $1 744 from the village fund to buy n i n e sewing machines. T h e group has agreed to pay back the loan by paying $ 3 2 5 . 5 8 e a c h year for five years. The group receives orders from subcontractors w h o act as m i d d l e m e n b e t w e e n the company and the group. Currently, there are two m a i n sources of contracts. O n e contract is with an exporting c o m p a n y to p r o d u c e jackets a n d sports uniforms a n d the other is mostly for local markets. T h e group prefers to produce for local markets because they provide more formal orders a n d these are n o t rushed. Social protection The Banthi group is n o t as well established a group as A n o n g ' s a n d have n o t registered with t h e social insurance f u n d . However, t h e m e m b e r s receive h e a l t h cards and so far appear to be relatively satisfied w i t h this, w h e n it is combined w i t h o t h e r local schemes. For health needs, they usually go to the district public hospital. For a certain n u m b e r of disabled persons who have n o relatives, the Tamboon (subdistrict) Administration Office provides a monthly allowance of $34.88. In addition there is a cremation program in every village. Members pay $11.63 upon application and $0.70 upon the death of each member. T h e a m o u n t of the total cash benefits varies depending on the number of members in each sub-district. In addition, the Bantlii group has set up a f u n d to pay for various expenses. The group deducts $0.06 from each piece-rate, which is $0.28 for stitching one jacket, as a contribution to the group's fund. T h e f u n d is used mainly to pay for utilities, communications, transportation and other materials, such as thread and needles. T h e members have to contribute $4.65 a m o n t h to the group fund to pay hack loans. During seasonal farming, all of the members stop subcontracting work; thus, they c a n n o t pay into the fund. T h e fund has also been used for general purposes, such as loans for school tuition fees for needy members, as a revolving loan fund for members who need emergency cash, and to make donations towards the community's activities. However, the size of the existing fund is still small. A n u m b e r of other community-based services and programs offered by local and national government offices also provide loans, grants, and other services to rural (and urban) residents. These services have been increasing in recent years, in line with the government's philosophy of providing funds through community organizations to local villages and communities. Work-related health problems T h e Banthi group members did not report any serious illnesses. Their common concern regarding health is back pain, irritation of the eyes and allergic reactions to dust. As observed by the field researcher, their chairs appear to he too low and do not have any cushions, which may be causing the back pain. In spite of the fact that the Banthi group members do not report significantzyxwvutsrponmlkjihgfedcbaZYXWVUTSRPONMLK health problems, health and safety risks seem to be the m a i n concern among homeworker groups in the region. 97 SUMMARIZING THE IMPLICATIONS OF THESE TWO CASE STUDIES The increasing trend toward replacing formal workers with temporary and contract workers is recognized as a major risk for formally employed workers. •f M \ A If / / Agency factory workers • The organizing of agency workers remains a significant challenge. Even though / they are gathered in factories and thus should be easier to organize, they are ( tsrpomjeaJ \ if under pressure not to join organized groups or unions. " National programs such as social insurance through the S S O often have difficulty reaching informal workers due to a n u m b e r of limitations, as well as the lack of awareness of the benefits of registering with the S S O on the part of informal workers. Agency workers, and migrant workers in particular, may thus I J 1J 98 have a more difficult time facing illness, disability and old age t h a n do formal factory workers. Many may even be in a worse position t h a n rural, subcontracted workers, who can gain access to other forms of social protection through community and occupationally-based groups. T h e level of anxiety and vulnerability appears to be m u c h higher for both the urban formal and informal workers, n o doubt because they feel directly and dramatically that their jobs are not at all secure. T h e y are very worried about the future. They may have left the rural areas because of a lack of jobs, and now they face equally uncertain prospects for the future in the labor-intensive industries that are cutting jobs and transforming the nature of employment. Homeworkers • T h e diffused nature of their work sites makes it difficult to organize homeworkers. It is also frequently difficult to trace the employer of homeworkers. • T h e second case study showed that a small, home-based workshop in a rural province can also — like large urban factories — provide its workers with social insurance benefits through the S S O if the homeworkers are organized. • T h e well organized homeworker groups that are more tied to local markets feel that their employment is more stable and secure t h a n that of subcontracted workers w h o work for longer chains in more rapidly changing segments of the industry. T h e i r sense of vulnerability is also reduced by the fact that, particularly in rural areas, many have access to alternative employment in agricultural activities. • T h e example of Anong's (the Makuejae) group and its decision to access the SSO benefits is instructive, as is the Banthi group's access to a combination of community-based and national and local government-provided programs. • The rural (non-migrant) workers who do n o t have access to social insurance health benefits still have access to the health card. They can go to a nearby public hospital with a minimum payment of $0.70. They also have access to a number of programs offered by community groups and local government offices. The more organized and networked workers are, the more access they have. • The establishment of a group welfare fund, such as the Banthi sewing group's fund, shows the virtue of mutual self-help among group members who have less access to different resources. Tabic 8 on the following page provides a summary of access to social protection of workers in the various companies and groups mentioned in both case studies. Table 9 summarises current problems, types of organization and representation and further needs. IOO Tabl e 8: zyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA Typology of workers and their access to social protection Categories of workers Sources of contract Type of contract Place of work Rem uneration CFB formal work ers (eg, Ms. Som porn) Registered com pany w i t h I 100 work ers Wr i t t en cont ract Factory space Mon t h l y salary based on daily wage Social insuranceywvutsrponmlkjihgfedcbaVTSNMLHDCA benefits (init ially not paid). Ot her benefits provided by t he f act ory (also negotiated after ongoing protests by labor union). GFB subcont ract ed work ers (eg, Ms. Surat ) Registered com pany w i t h 300 subcont ract ed ('t em p or ar y') workers Wr i t t en cont ract Fact ory space Daily wage Social insurance benefits (are required t o be offered by law but in practice n o t given, and there is lit t le recourse because workers are not allowed to organize or join a labor union!. CFH formal work ers (eg, Ms. Sam ruay) Registered com pany w i t h 250 workers Wr i t t en cont ract Fact ory space Mont hl y salary based on daily wage Social insurance benefits. Ot her benefits provided by t he factory. Makuejae group Unregist ered (Anong 's) work shop w i t h I 5 subcontractedworkers workers (eg, Ms. Niem ) No wr i t t en cont ract Sm all wor k shop for 15 work ers Daily wage Social insurance benefits (wi son registered as 'employer') Com m unity- based schemes. Bant hi group m em bers Registered com pany w i t h 10 group members No wr i t t en cont ract Group leader's space for 10 people Daily wage Social services. Com m unity- based schemes. Group fund. Hom eworkers Subcont ract or No wr i t t en cont ract Ow n hom e Piece- rate wage Social services. Community- based schemes ? 101 l e9 : jtegori" of workers fgonal workers •ji workers) Current problems, types of organization and representation, further needs and potential organizations Sit uat ion - problems Organiz ation and representation Further needs potential organiz ations Un d er labor p r o t ect i o n l aw utbB but 9 labor congr esses, 19 labor f eder at ions, 6 groups of labor u n i on s (co m p o sed of I 131 t r ade u n i on s, w i t h 84 t r ade u n i on s in t h e garm ent i n d u st r y) [dat a as of Mar ch I 2 0 0 2 ], Labor- based N GOs. Aw ar en ess r aising and cam p ai g n i n g o n t h e issue of su b con t r act i n g , so t h at t h e t r ade u n i o n w o u l d accep t su b con t r act ed wo r k er s as m em b er s. Unor g aniz ed , no r ep r esent at ive. Dat ab ase of su b co n t r act ed wo r k er s t o get m ore i n f or m at i on and dat a o n w o r k i n g co n d i t i o n s and p r ob lem s. Aw ar en ess raising and cam paigning. St u d y and research. Policy advocacy. incr easing num ber of f act or ies u si n g su b co n t r act ed wo r k er s t o replace f orm al wor k er s. Un d er Social Secu r i t y Act : ^contracted workers in f a c t o r y gVS workers) Un d er labor p r ot ect i on l aw but vi o l at i o n of labor l aws. Un d er Soci al Secu r i t y Act but vi o l at i o n of SSA, and vi o l at i o n of Labor Rel at i on s Act wor k er s are not al l o w ed t o organize or j o i n act i vi t i es of CFB wor k er u n i on . workers ;!H workers) Un d er labor p r o t ect i o n l aw •takers in s u b c o n - Wo r k i n g in sm all wo r k sh o p but ::-mal •icting group Makuejae/ A n o n g ' s roup) '- kers of a Un d er Social Secu r i t y A ct CLIST is d evel op i n g a pilot p r oj ect aim ed at im p r oving w o r k i n g con d i t i on s of t he GFB's su b con t r act ed wor k er s. Ho m eNet is w o r k i n g w i t h CLIST t o d evelop d at ab ase. Co o p er at i o n w i t h ot her cat egor ies of wor k er s in t h e val u e ch ai n s. Financial sup p or t . Un or g an i z ed , n o t r ad e u n i on , n o r ep r esent at ive. Un or g an i z ed , n o r ep r esent at ive. no legal st at u s and unclear st at u s Th e local au t h o r i t y of f ices, ie, p r ovincial labor of em p loyer - em p loyee relat ionwelf ar e of f ice, Tam b on ad m i n i st r at i o n of f ice, ship. et c. are p r o m o t i n g t h i s t yp e of group under The em p l o ym en t r elat ion is based sm all and m icr o- com m unit y- b ased ent er pr ise on j ob co n t r act (o w n er of at village level. p r od u ct i on and r aw m at er ial, Regist ered w i t h cer t ai n local g over nm ent design, set - up p r ice) Thi s m ay be of f ices (t h i s group has regist ered w i t h t h e consid er ed as a self - em ployed provincial labor wel f ar e of f ice). group and shoul d be p r om ot ed Ho m eNet has a co n t r act w i t h t his t yp e of under t h e sm al l and microgroup in cer t ai n areas. ent er p r ise schem e. Recei ve social secu r i t y benef it s so m ust p ay em p l oyer and em p l oyee co n t r i b u t i o n s. group's Social p r ot ect i on p r om ot ed . Need m ore eq u i p m en t t o ex t end group m em b er s. Cr eat e n et wor k i n g . St u d y on p ot en t i al of b ecom i n g a m odel of t h e self- help group required. Have creat ed a group cent ral fund. Ho m eNet is p r o m o t i n g t h i s t yp e of group as a m odel of a p ot en t i al com m u n i t y- b ased group. The wo r k s of Ho m eNet i ncl ud e r aising awar en ess o n t h e issues of h om ewor k er s, research and st udy, cap aci t y building, policy ad vocacy and social p r ot ect i on i ni t i at i ves. t h e SSO). Ho m eNet is p r o m o t i n g group f or m at i on of h om ewor k er s. Cr ou p or ganiz ing of h om ewor k er s But inad eq uat e eq u i p m en t , lack of cover age by labor l aws, unclear legal em p l o ym en t st at us, no access t o social securit y, h eal t h and saf et y problem s. ^Workers Or g aniz ing groups of wor k er s. Mor e i n f or m at i on o n t h i s t yp e of group required. Pr om ot i n g clearer st at u s and appropriat e p olicy an d legislat ion. Ed u cat i o n on d ecen t co n d i t i o n s of em p l o ym en t . Co - i n vest m en t of group m em b er s Loosely organized by Ho m eNet in Bangkok, n or t h east er n and n or t h er n p ar t s of Thai l and . A n et wor k am o n g t h e sam e occu p at i on al Recei ve piece- rat e wo r k s f rom groups cr eat ed in cer t ai n areas (ie, a net wor k su b con t r act or and t h e f act or y of sewi n g groups at Lad k r ab ang d ist r ict in direct ly. Bangk ok ). self- help t o b uy sew i n g m ach i n es, rent ing, ' ontracting group ut i l i t i es. Ambers) Trade u n i o n shoul d be or ganized. Lack of access t o resources Voi cel ess Lack of social p r o t ect i o n Ex t end group organizing. Sk ills d evel op m en t needed. Social p r ot ect i on needed (eg, t h r ou g h needs t o be p r om ot ed and ex t end ed . Sk ills d evel op m en t needed. Social p r o t ect i o n needed (eg, t h r ou g h t he SSO). 102 Part 4 Conclusions and recommendations TH E ORGA NIZ A TION A ND REPRESENTA TION OF W ORKERS IN THE INDUSTRY T h e level of social protection in the industry depends o n the level of organization and representation of workers in firms, micro-enterprises and production units at every link of the value chain. Unionized formal workers in large factories have the most access to formal and informal types of social protection through the collective bargaining process and participation in the decision-making processes of the company. T h e strength of the union at plant level is reinforced if it is a member of a national federation, which can further strengthen bargaining and e n h a n c e the awareness of members on broader issues, such as gender. Affiliation to an international federation takes the power of workers even further. Global labor strategies can ensure that the future of the industry is decided n o t only by the employers hut also by labor. At the community level, organizations of workers, such as H o m e N e t and its affiliates are able to expand their sources of social protection beyond the usual indigenous schemes. They can lobby for more realistic membership conditions with respect to the national social security schemes and health programs, while at the same time enrolling in non-governmental social protection mechanisms that are friendlier and more accessible. W h e r e unorganized labor is used in the garment industry, whether in a large factory setting or in medium-sized or smaller production units, a lack of enforcement of existing labor and social protection laws is a c o m m o n and very significant problem that needs to be clearly recognized and directly addressed. The value chain approach used in this study shows up the vulnerability of workers who have so far remained unorganized and therefore unprotected. T h e possibility of organizing t h e m is being explored by unions, b u t this possibility is tempered by the realization that the organizing effort can lead to even more worker displacement as the contracting firm may decide to give its orders elsewhere. Where unorganized workers are migrants with no roots in specific communities, their vulnerability is increased. If they were p e r m a n e n t residents, they might have greater possibilities for accessing local government, N G O or C B O assistance, b u t as migrants this is m u c h more difficult. Homeworkers who have n o t been reached by organizing efforts and have n o community-based group to rely on to facilitate access to social security, health benefits, and other forms of social insurance and assistance, are some of the most vulnerable workers. They may have informal networks of relatives and neighbors, and if they are indigents, they may be entitled to some form of aid from local government, but nothing o n the order of a comprehensive and sustainable package that can address their most important and urgent needs during times of risk. Recommendations • All organizations that are concerned with workers need to work together to ensure that their basic labor and social protection needs are met. This can take the form of efforts on the part of N G O s , trade unions, homeworker networks, women's associations and other supportive organizations, working together toward local, national and international goals. T h e particular challenge is to target vulnerable workers. To do this effectively, they need to have a realistic understanding of local needs and circumstances. A clear understanding of the national and industry context is also crucial. • Every organising effort that takes place has to take gender issues on board, since most workers in the garment industry are w o m e n whose needs at every stage of the life cycle should be addressed comprehensively. Young women of reproductive age need to have access to reproductive health services, including fertility 104 management, prenatal care w h e n pregnant, maternity benefits when giving birth and childcare services subsequently. Older women, especially those who are single, abandoned or widowed, need financial support in the form of adequate pensions w h e n they are already too old to work. A recognition of both female and male informal workers' workplace-related health problems also needs to be incorporated into social protection schemes, particularly in view of the hazardous circumstances under which informal workers usually live and work. TH E SOCIA L PROTECTION OF W ORKERS IN THE INDUSTRY T h e following conclusions can be drawn in relation to social protection for workers in Thailand and the Philippines: • Workers in firms at the low end of the garment industry, producing low-priced, standardized garments, face the highest risks in the industry. In these firms sales patterns are seasonal and vary greatly with the unpredictability of fashions, employment patterns are subject to rapid changes and no geographic location is required. This means that firms move to locations that allow them the flexibility to hire and fire workers under their own terms. Workers in these firms are at risk in terms of employment vulnerability and the cancellation of job orders. They have the least protection against occupational safety and health hazards, and are io5 the least likely to have access to m i n i m u m wages or enforced labor and social protection. Paradoxically, although these workers are most in need of codes of conduct and ethical trade initiatives, this is where such measures are least likely to have any substantial effect, since monitoring and enforcement are so difficult. • In the middle range of the industry's c o n t i n u u m of products, firms are also highly mobile, and are undertaking geographical shifts to low wage/low cost countries. If these firms do remain in higher cost countries they are likely to casualize production. This part of the industry includes a good number of high profile international retailers at one end of the chain, and therefore international campaigns directed at high profile purchasers and contractors who are conscious of their international image can have an effect. • At the relatively high end of the industry, involving more expensive and higher quality garments, firms' lead times are very short, and b o t h quality and design are very important, as is price. Workers need to be more skilled and quality control is high. Here, codes of conduct and ethical trade initiatives, as well as other international and national efforts, can have the greatest effect, since the high profile retailers, and branded manufacturers in particular, could make good working conditions part of their marketing strategies. io 6 Recommendations T h e following recommendations pertain to the roles that various players in the garment industry could play in order to improve social protection for workers in the industry. At international level: • In principle, the large manufacturers, merchandisers and retailers should abide by clear guidelines ensuring workers' rights, including the right to social protection, not only for themselves but also for their suppliers, contractors and subcontractors. Their codes of conduct need to reflect this principle and should be formulated, implemented and monitored with the participation of workers at every level of the value chain. Realistically, however, such codes of conduct may only be effective — under present circumstances — in the case of relatively high profile firms conscious of maintaining a clean image before the global consuming public, and only if independent (and ideally unannounced) audits are conducted involving all types of workers participating in the firms' operations from the bottom up. Laws should also be initiated and enforced to ensure that even low profile and low-end employers are required to contribute to social protection programs for their workers. However, this must ultimately be done o n a supra-national basis to ensure that jobs do not simply go elsewhere. • Ethical trade advocacy groups and consumer and civil society organizations should continue to work in partnership with trade unions and other workers' groups. This enhances worker participation in the formulation and monitoring of firm-specific codes of conduct, as well as in advancing fair trade in general. These groups need to make sure that company-specific codes, as well as national laws, are actually put into effect, without disadvantaging small producers or causing job losses for already very low-income women, m e n and children, forcing t h e m into even worse jobs. • T h e social protection and empowerment of women informal workers should be a special focus of campaigns, so that w o m e n can be at the center of the picture instead on the margins. • T h e role of U N organizations, multilateral institutions, development banks and aid agencies in the area of social protection for informal workers needs to be strengthened in the context of the overall trend towards emphasizing a rightsbased approach to development, poverty reduction and empowerment of the poor and the socially excluded. At national and local level: • T h e balance of national versus local programs of social protection will depend on the country. In more urbanized countries, national programs may be more effective. However, in countries with strong community ties and local organizations (if relatively free of distortions created by local politics), it may be better for the national government to strengthen the local institutions and c o m m u nity ties with respect to some aspects of social protection. • Again, regarding national versus local programs, it may be better to differentiate between social protection that will require universal coverage, and protection that may be better provided on a community or more localized basis. National health coverage but local funeral coverage would be an example of this. National governments must address the problems of a declining industry in the face of intense competition b o t h in the export and the domestic markets. Rescue plans must be based o n the interests of all stakeholders, and should be monitored to ensure that funds are allocated and actually spent according to decisions made collectively. They should include not only financial and technical assistance for employers, but also skills upgrading for workers to improve their chances of job retention, along with programs to help workers who will unavoidably be displaced to find and retain alternative sources of employment. Local governments need to have employment promotion as well as social protection and assistance programs whose impact can be felt at community level. Partnerships should be forged with community-based organizations (CBOs) and indigenous initiatives. T h e private insurance and banking indn can also be involved, but ideally in partnership with trade unions, homewor organizations, cooperatives and CBOs. T h r o u g h representation in local gov merit councils and offices, C B O s can help ensure that social protection schemes are tailored specifically to different types of informal workers, inclu meeting the specific circumstances faced by w o m e n workers. National assistance must also be provided to allow local systems to develop effectively towards self-reliance, self-sufficiency and solidarity. O n c e local systems are in place and are sustainable, they can take their own course witl m i n i m u m national intervention, if at all. Research at b o t h national and local levels should continue to be conducted by N G O s as well as academic and research institutions in order to examine effective sources of social protection for different types of workers, especially informal workers in general, and subcontracted and casual factory and hom workers in particular. For homeworkers, research should focus primarily on 1 production for local markets. • There is a need to develop effective social protection programs based on an understanding of various risks, vulnerabilities, needs and priorities from a culturally-specific and gender-sensitive perspective. W h a t should be kept in mind throughout, in designing effective research-based protection programs, is that these should go beyond being merely a patchwork of resources already available in the locality, and strive toward comprehensiveness, systematization and sustainability without losing the flexibility to m e e t individual needs. CONCLUSION IMPLICA TIONS FOR POLICY, RESEA RCH A ND A CTION T h e studies in this hook introduce a new approach to social protection that explicitly focuses o n globalization and changes in the labor market. They use value chain analysis to explore the conditions under which people work. T h e studies of horticulture in Chile and South Africa, and the garment industry in Thailand and the Philippines, allow the inclusion of urban and rural work, as well as the effects of seasonality on the security of work. Looking at different chains in different industries, and within different chains in the same industry, clarifies some important aspects of risk and vulnerability for different categories of worker, as well as their access to social protection. Detailed conclusions and recommendations for each sector are found in each of the separate studies. T h e aim of this final section is to: s Identify the main lessons learned from using a comparative methodology for two sectors » Identify some sites for practical policy engagement and program intervention • Make concrete suggestions for further research. Main lessons learned from using a comparative methodology for two sectors Country specific analysis It is a truism that 'one size fits all' approaches to the design of social protection systems for informal workers are inadequate; yet international agencies can tend to promote uniform approaches. These studies show the need to be country specific when analyzing access to social protection. Informal workers receive very limited social benefits through their work. M u c h depends on what is available through the national or local state, and this makes a big difference to the basic security of workers. In Thailand, the local government plays a role in the provision of social services. In S o u t h Africa, o n the other hand, state social pensions and disability grants for poor people are a c o m m i t m e n t from the central government (though channeled through the provinces). In S o u t h Africa, again, women informal workers can get free reproductive health services, though these are of uneven standard. In Chile, the contributory health insurance scheme is in the process of being extended to all workers on temporary contracts, giving them year-round cover. T h e Philippines case shows that, even though informal workers are eligible to belong to the Philippines Social Security System, a small fraction bother to do so, as it is difficult administratively to contribute and benefits are low. Income as a priority In the horticulture study, the researchers reported that employment was the key issue that workers wished to talk about, and that it was difficult to engage workers in conversations about social protection. They reported that workers may have been afraid of voicing their needs, or that social benefits were not attractive because income would be deducted from wages that were already low. T h e garment study showed that workers are unwilling to contribute toward social benefits, w h e n they are uncertain about the advantages or security of the schemes. Social protection to include childcare and housing Childcare and housing do not usually fall within the scope of social security or social protection, and these studies suggest the need for their inclusion in future. W i t h regard to childcare, women worldwide are increasingly participating in the labor market. T h o u g h there is some evidence from n o r t h e r n countries that m e n are engaging in more care of children, it is safe to say that in general m e n do not engage as m u c h in this form of work as women's new roles would require. These studies show clearly the different ways in which family life is disrupted so that women can work and support their households. In South Africa, horticultural workers who get on-farm housing are able to have their children with them; in Chile, o n the contrary, in the fruit season many workers have to move far from where their families are. Some garment workers live o n the factory premises without their children, but on the whole, these workers are less frequently removed from their families and communities t h a n those in horticulture. W i t h regard to housing, the garment study shows vividly how people's homes are used as places of work, and that children are cared for simultaneously while productive work is carried out. In b o t h horticulture and in the Asian garment industry, some workers obtain housing as part of or as a condition of the work. T h e condition of housing o n some S o u t h African farms was described as appalling. Recently, in the process of job shedding, many workers lost access to the housing, as well as to other 'benefits' tbat were traditionally attached to the paternalistic or feudal relationship with the owner or manager. Gendered changes in labor market participation and the way in which private homes are increasingly used for productive work suggest that the scope of social protection should be broadened to include b o t h childcare and housing. Different industries, different risks Different industries or sectors carry different kinds of risks. In horticulture, many workers are o n short term seasonal contracts. For some of these, however, thenseasonal employment appears to be more assured year after year, and this is related to the overall increase in growth of this sector. T h o s e in horticulture face exposure to chemical hazards, which are not faced by those in the garment industry. G a r m e n t workers in small informal factories, however, can be in poorly ventilated and poorly lit environments. G a r m e n t workers in the two Asian countries have been seriously affected by the financial crisis, with major job-shedding. They work in a fiercely competitive industry, in which fashions change fast — and changes in fashion m e a n changes in skills required to do particular stitches. This itself is a risk factor. In all of the studies, it was clear how workers and their families are absorbing some of the costs of production, which would 'normally' be accepted as a legal responsibility of the employer. T h e link between productivity o n the one hand, and occupational health and safety on the other, has been lost. Extension of social protection by governments Three of the four countries had introduced, or were in the process of introducing, new schemes or reforms that would extend social benefits to non-standard and informal workers. H o m e N e t in Thailand was participating in the design of the new 30 b a h t health scheme, which aims to bring affordable health services to all T h a i citizens. In S o u t h Africa, domestic workers are targeted for inclusion, for the first time, in the unemployment insurance fund. In 2002 Chile extended its contributory social health insurance to contract and informal workers. These are all good examples of reforms that are in line with the ILO's policy thrust of including formerly uncovered categories of workers in social protection schemes. It remains to be seen to what extent informal workers in dispersed places will be able to get access to these benefits: the administrative challenges are enormous. 4 Different levels of visibility of owners, employers and buyers A feature of new global labor processes is that workers producing goods, or parts of goods, may not know who they are working for — they may interact only with a labor broker, or a factory manager, and the latter may himself or herself be in an informal contract with a supplier. In these studies, the great difference between the two sectors is clearly revealed. A few large firms dominate the horticulture chain, and the chains of production and distribution are relatively transparent. In the garment industry, o n the other hand, there is a series of complex linkages, with m u c h use of labor brokers. T h e contractors and brokers themselves are often economically insecure. In an approach to social protection that seeks co-responsibility between different interest groups, there will be sectoral differences with respect to how to secure the c o m m i t m e n t of the owners of capital or employers of workers. In a growing industry with a simpler chain and one in which there is more vertical integration, such as horticulture, it should be easier to call these groups to account. It would be more difficult in industries such as the garment industry, where chains are complex and those driving the chain are less visible. Extending social benefits in ways that depend on the voluntary co-operation of owners of capital will be difficult. Need for strong organizations of informal workers A necessary (but not sufficient) condition for informal workers to get better access to social protection is through organizing. Organizations are themselves a source of support and security. T h e studies show striking sectoral differences with regard to the organizational life of informal workers. T h e r e are dense and active networks in Thailand particularly, where workers are engaged in informal agreements and loans, in rotating savings and credit associations, have links to N G O s , and are involved with indigenous associations. This is in strong contrast to the relatively barren horticultural context in both Chile and S o u t h Africa, where workers on the whole live in isolated 'communities' of farm laborers, away from organic residential neighborhoods. T h e workers, with their few assets and resources, are 'the community'. In Chile, the researchers found few identifiable organizations of any sort in the areas in and surrounding the fruit farms. T h e r e are great difficulties in organizing due to migration and because of the duration of periods of work. In South Africa, the m o v e m e n t and network of community-based advice offices, through which farm I workers could get legal advice about rights and entitlements at work, started diminishing in the 1990s. In all places and in b o t h sectors, there is a fear of organizing because of the fear of losing work. Workers said that income — even low incomes in exploitative conditions — is preferable to n o income at all. T h e ChileanywvutsrponmlkihgfedcbaTPECBA temporeras were excluded from membership of formal trade unions, and the garment workers in Thailand were not allowed to organize. Organizations of informal workers could be assisted if alliances were formed with organizations of formal workers, b u t worldwide, the latter are, with a few notable exceptions, cautious about engaging organizationally with informal workers. Their own interests and hard-won gains are threatened by an inclusive approach to informal categories of workers. These studies are small and cover two sectors only. T h e r e may well be other international experiences where formal labor unions have assisted or formed alliances with informal worker organizations. This will be suggested as a t h e m e for further study. Various affiliates of W I E G O have demonstrated that organizations of informal workers can intervene in national policy-making and policy-influencing forums. Box 7 on the following page gives concrete examples from Thailand, S o u t h African and India. Need for better statistics on social protection T h e studies show the need for a systematic and national-level collection of statistics about access to work-related social protection. T h e r e is great variation between countries as to the extent of the statistics collected in labor force surveys. In all countries, there is a gap in respect of social protection coverage derived through the workplace. This is a worldwide problem; even in those countries where questions about social benefits are asked in national household surveys or in labor force surveys, they are asked of the e n u m e r a t e d workers only — so there is n o way of knowing w h e t h e r their family members are covered as well. As a corollary, it is n o t possible to know how many people lose access to social benefits w h e n one worker loses benefits in the event of job loss or informalisation. There is a need for a comprehensive and concerted international campaign for improved statistics about social protection. This should be inserted into labor force surveys, as well as into living standards (including income and expenditure) surveys. T h e series of Basic Security Surveys that have been done under the SocioEconomic Security Program of the ILO may he able to provide conceptual and methodological lessons as to how to ask better questions about social protection. 116 Box 7: zyxwvutsrqponmlkjihgfedcbaYWVUTSRPONMLKJIHGFEDCBA Different sites for policy intervention and influence Organizat ions of inform al workers can cont ribut e t o im provem ent s in condit ions of work in a var iet y of plat f orm s ot her t han in t heir im m ediat e work place. In T hailand: The leader of Hom eNet in Thailand has been a member of a nat ional com m ission on universal healt hcare coverage. The com m ission was set up f ollowing a cam paign in wh i ch a coalit ion of CBOs com bined t o get t he 50 000 signatures necessary t o propose a bill about healt hcare. Organizat ions represent ing five const it uencies were accredit ed t o represent civil societ y — namely, inform al work ers, t he disabled, people affected by HIV/ AIDS, consum ers and academ ics. In So u t h Af rica: The Self Em ployed Wo m en 's Un i on ( SEWU) in Sout h Africa has int ervened in a num ber of significant policy plat form s in t he dem ocrat ic t ransit ion. It made subm issions to t he Com prehensive Labour Market Com m ission, t he Com m ission of Enquiry int o t he Provision of Rural Financial Services, t he draft of t he Labour Relat ions Bill, as wel l as t o t he Trade and Indust ry policy on support for sm all businesses. In India: The Self Em ployed Wo m en 's Associat ion in (SEWA ) India has part icipat ed in a variet y of st at e and nat ional com m it t ees and com m issions — on labor, on social security, on ex t ending social securit y to inform al workers and on childcare. It is participat ing in t he Task Force set up by t he Ahm edabad Municipal Com m ission t o develop a policy for urban workers in t he inform al econom y. It s ex perience in dealing w i t h a series of cyclones, drought s and t he eart hquake in Guj arat is being brought t o bear on influent ial governm ent agencies; it is a member of t he Ad vi sor y Com m it t ee on t he Gujarat St at e Disast er Managem ent Aut horit y, and it was select ed by t he nat ional and st at e governm ent to be t he lead partner in t he Livelihood Securit y Project for Earthquake Af f ect ed Rural Households in Gujarat . Sites for practical policy engagement and program intervention T h e studies give leads to concrete sites for policy intervention, which would lever significant material gains for substantial numbers of people. Extension of labor standards and social protection benefits T h e main recommendations of the researchers in b o t h studies are for the extension of the regulatory regime of labor standards to include more workers in different categories. In the S o u t h African context, agricultural and now domestic workers have been drawn under the umbrella of some of the basic employment regulations, and into unemployment insurance coverage. T h e r e is evidence in the studies of places where labor standards existed but were ignored. More needs to be k n o w n about the conditions under which effective extension can be achieved — that is, extensions t h a t can actually be implemented and monitored. The scope for legal challenges T h e r e arc limits to litigation. It may win cases, yet not be translated into actual entitlements or improvements for substantial numbers of people. T h u s it would be useful to explore the conditions under which improvements in working conditions could be e n h a n c e d through constitutional or legal challenges. Integrating improved access to social protection within ethical codes of conduct T h e horticulture study shows the potential of ethical codes in binding employers and owners of capital to improvements in working conditions. How far could social protection benefits be integrated within ethical codes of conduct? A workshop with leaders in the ethical trade movement, based o n case studies such as these, could assist in identifying precisely and strategically what potential there is for such integration. Integrating the working poor within poverty reduction frameworks Poverty analyses too often see the poor as excluded and marginalized and as needing to be helped to find work or create work. W h a t should be recognized are the sustained efforts of millions of people in creating their own work, or working for others for their lifetimes, yet they are n o t able to escape poverty. How can their II8 conditions of work, and the trapped power relations in which they work, be made more visible and more susceptible to change? T h e working conditions of poor people should be more effectively integrated within poverty analysis and within the poverty reduction frameworks of influential international organizations, as well as within national policies. It is recommended that the three organizations involved in this initiative develop a strategic plan of action for doing this. Towards pilot schemes: policy dialogues in selected countries T h e value chain approach has been used as an analytical tool in these studies. T h e findings suggest that there would be potential in exploring its use as a strategic tool in designing or extending actual social protection schemes for different types of workers. Social insurance had its origins in the workplace; through this approach to the informal economy, an extended notion of social insurance could be grounded in the changed workplace under globalized patterns, conditions and power relations. T h e studies suggest that new schemes should work through an organization of informal workers; that they should assertively explore the idea of co-responsibility of different interest groups; and that, from the beginning, attention should be paid to building equal partnerships. A start could be m a d e through a national or regional process of setting up dialogues between employers, formal and informal workers, government at local and national level, and interested and supportive organizations. Thailand appears to offer the greatest potential at present to start this process. Recommendations for further research Additional sectoral studies These two studies have shown the potential of this approach to social protection, and m u c h has been learned from them. Further sectoral studies are needed, purposely chosen to fill some of the gaps in these initial ones. It is recommended that the following themes and questions be kept in mind in making decisions about which other industries to analyse: • In what ways are migrants exposed to specific risks and vulnerabilities? T h e choice of case studies did not allow sufficient analysis of this question. Migrants by definition leave their homes and communities for periods of time; they may lose access to social entitlements in their homeplace; they may not have access to entitlements in their workplace. It appears there are increasing numbers of women migrants worldwide, and they may be especially vulnerable. • How does the position of workers who produce for domestic markets compare with that of workers producing for export in global value chains? • T h e case studies showed good examples of grassroots action and, similarly, good examples of government intervention. How can the two be linked with each other institutionally and programmatically? • H o w can government and other interventions be designed so that they strengthen organizations of informal workers? • W h a t is the potential of the sector for integrating the leveraging of social benefits within the introduction of ethical codes? W h a t is the potential for creating links between codes of conduct, community organizations, and organizations of informal workers? Thematic studies These studies point to the need for analytical and empirical work to be done in the following areas: • U n d e r w h a t conditions can informal workers get access to formal insurance mechanisms? T h e private insurance industry needs to be persuaded to extend its insurance mechanisms to people wh o are informally employed. SEWA's experience suggests that this can happen. It should be possible, in further case studies of different sectors, to develop the assessment of specific types of risk in 119 specific industries. However, in addition to this, there is a need for studies that undertake actuarial modeling of actual risks faced by informal workers in different industries and in different positions of employment. Studies should be selected to enable comparative study of different places of work — for example, in people's homes, on the street, in informal factories and o n construction sites. 0 T h e r e is considerable evidence of the participation of informal workers in policy platforms. T h e r e is a need for a critical assessment of how and whether these policy interventions make a difference, and w h a t the ingredients are of successful interventions. • Under what conditions are unions of formal workers willing to form alliances with, and extend support to, informal workers in their struggle for social protection? A mapping exercise is needed which identifies and analyses situations in which new social contracts have been formed between formal and informal workers. T h e approach to social protection used in these studies has shown the complexity of the problem, and the extent of the challenge involved in improving access of informal workers to social protection. This is n o t a comprehensive or a holistic approach. Rather, it is a way of heightening awareness of the fact that the majority of the world's working population is facing declining access to social benefits through the workplace. Conventional value chain analysis has tended to c o n c e n t r a t e only on the 'value added' at different points in the chain of production and distribution. By focusing on the workers at different positions in the chain, and on their needs for security for themselves and their households, a more nuanced perspective is introduced. In these studies it can be seen how the value added to a commodity may increase the risks to the health status of workers. T h e value added to a commodity may m e a n less security for the workers and his or her family. T h e focus o n short term competitiveness detracts attention from the need for h u m a n capital formation of the present generation of workers, and for the access to education of their children — the next generation of working people. T h e use of value chain analysis showed clearly how the type of employment arrangement determined the access to specific measures of social protection, and how workers with less secure working status either had to make their own provision to mitigate against risk, which was hard to do, because of their insecurity, or they depended on provision by the local or central state for, for example, health services. Worldwide, the tendency is for more people to be employed in less secure ways in chains of production. W h a t is needed is the building of ladders of protection, so t h a t workers can, in an incremental way, claim or reclaim more security and more protection against risk. T h e r e will only be progress up this ladder of social protection if there is increased co-responsibility of multiple interest groups. These include the owners of capital, governments at different levels, formal and informal workers themselves, b o t h individually and in associations of different kinds, as well as nongovernmental organizations. REFERENCES Preface Barrientos, A. and Ware Barrientos, S. 2002. Extending social protection to informal workers in the horticultural global value chain. Social Protection Discussion Paper No. 0216. Washington DC: World Bank. Doane, D., Ofreneo, R. and Srikajon, D. 2002. Social protection for informal workers in the garments industry: a case study of the garments industry in Thailand and Philippines. Paper presented at Technical Consultative Workshop o n Social Protection for Workers in the Informal Economy, ILO, W I E G O , World Bank, Chamonix, April. 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(To be published by the International Labour Organization, Manila, Philippines.) A PPEN DIX Participants at the Technical Consultative Workshop, Chamonix, France April 1 0 - 12, 2002 From the ILO, WIEGO and the World Bank Gordon Betcherman World Bank Sudarshan Canagarajah World Bank Marilyn Can- WIEGO Martha Chen WIEGO Robert Holzmann World Bank Christian Jacquier ILO Renana Jhabvala W I E G O (and SEWA) Sandrine Lo-lacono ILO Rakawin Leechanavanichpan W I E G O (and H o m e N c t Thailand) A m y Luinstra World Bank Francie Lund WIEGO Evy Messell ILO Emmanuel Reynaud ILO Radha Seshagiri World Bank T h e Rie Vejs-Laursen ILO Horticulture industry researchers A r m a n d o Barrientos Institute for Public and Development Management, Manchester University Stephanie Ware Barrientos Institute for Development Studies, Sussex Garment industry researchers Donna Doane Independent consultant Rosalinda O f r e n e o University of the Philippines Daonoi Srikajon H o m e N e t Thailand 7 8 1 8 6 8" 4 0 5 1 4 5 H o w do the many people w ho w or k in informal employment get access t o measures of social prot ect ion that will enable t hem t o build mor e security for t hemselves and for their children? Given t he current t endency for mor e and mor e people t o be employed under insecure arrangement s, in international chains of product ion and distribution, how can ladders of prot ect ion be built so that w or ke r s can claim or reclaim great er security and increased prot ect ion against risk? The se quest ions w e r e addressed in a research initiative done by the International Labour Organizat ion, the global net wor k W I E G O ( Wome n in Informal Employment : Globalizing and Organizing) and the Wor ld Bank. This book present s the fr amewor k for an innovative appr oach t o social prot ect ion, which is based on an underst anding of the w or king lives of poor er people engaged in global value chains. It gives the findings of comparat ive studies of the horticulture industry in Chile and Sout h Africa, and the garment industry in Thailand and the Philippines. It dr aw s out the implications for policy, research and action. The se include the pr omot ion of better statistics about different t ypes of informal employment status, the possibilities for ext ension of social prot ect ion measures, and the integration of t he w or king poor into povert y reduct ion f r amewor ks and strategies. This w o r k is licensed u n d e r a Creative C o m m o n s Attribution - N o n c o m m e r c i a l - NoDerivs 3.0 Licence. T o view a copy of the licence please see: http://creativecommons.org/licenses/by-nc-nd/3.0/